R&D Tax Relief
We help companies assess whether their work qualifies for R&D tax relief and prepare claims supported by appropriate evidence.
R&D Tax Relief
Research and Development (R&D) tax relief allows companies to claim tax relief or credits on certain costs incurred in developing new products, processes or technologies. It can be valuable, but not every project involving innovation will qualify.
What qualifies for R&D tax relief?
For tax purposes, the key question is whether there is scientific or technological uncertainty where the solution is not obvious to a professional working in that field.
The work must seek to advance knowledge or capability in science or technology rather than simply develop something new to the company. A project does not have to succeed to qualify, but there must be genuine technical uncertainty that the company is trying to overcome.
What costs can be claimed?
Qualifying expenditure can include staff costs, materials, software and data costs, cloud computing and certain subcontracted work. There are additional restrictions on subcontractors and externally provided workers carrying out R&D overseas.
It is important to establish when the R&D project started and finished, which activities qualify and what proportion of the costs relate to those activities. This requires a good understanding of the work undertaken, as well as the tax rules.
How does R&D tax relief work?
For accounting periods beginning on or after 1st April 2024, the merged R&D scheme provides a taxable expenditure credit of 20% of qualifying costs. Enhanced relief is also available to certain loss-making, R&D-intensive SMEs.
The claim process has now become more demanding. Companies making their first claim, and some previous claimants, must notify HMRC within six months of the end of their period of account. An additional information form must also be submitted before making the claim through the Corporation Tax return.
R&D tax advice from Tax Innovations
R&D tax relief has attracted advisers who focus on generating the largest possible claim, often charging a percentage of the amount recovered. The problem comes when HMRC challenges the claim and the company is left to justify the figures.
At Tax Innovations, we only provide R&D tax advice as part of our wider accounting and tax services. This allows us to understand the business and work with the people involved in the projects to establish whether the work qualifies, identify the relevant expenditure and prepare the supporting information.
Our focus is on making a claim that is defensible, rather than simply submitting the highest possible figure.
If your company is undertaking work that may qualify for R&D tax relief, we can help as part of an ongoing accounting and tax relationship. Contact us to discuss how we can look after your company’s wider tax affairs, including any R&D relief to which it may be entitled.
Get in touch to speak to an expert today
Get in touch today and speak to a member of the Tax Innovations team.
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