Most innovative business owners know only too well the cost of research and development, but did you know that your investment in R&D can be used to reduce your tax bill or even claim cash back as a proportion of your R&D spend? R&D tax credits are a UK tax incentive designed to encourage investment in R&D, and they can, in fact, be a very valuable way to inject additional finance into a business. But did you know that many businesses are not claiming all they are entitled to under the scheme, and a significant number of qualifying businesses are not claiming at all? And there is a school of thought that this may be because of a common misconception as to what ‘R&D’ actually is in this context. Read on to find out more…
There is an increasing awareness of the R&D Tax Credit provisions, and there has been an increase, in recent years, in businesses taking advantage of them. However, many businesses are still not claiming all they are entitled to under the scheme, and some not claiming at all. Apparently, there seems to be a general lack of understanding as to what ‘R&D’ actually means in relation to R&D tax relief claims.
It cannot be denied that the guidelines are rather vague:
To make a claim for R&D Tax Credits, your business must have:
- looked for an advance in science and technology;
- identified a technical uncertainty and tried to overcome it; and
- ensured that the technical uncertainty could not be easily solved by a competent professional in the field.
Your project may result in a new process, product or service, or improve on an existing one.
However, it does not need to result in a patentable invention nor does it necessarily need to have been successful. If any of the above conditions are true for your business, then you may be able to make a claim. However, it is important to invest time in gathering relevant information, especially technical reports documenting the R&D process and outcomes, focusing on the so-called “technical uncertainty”. Failing to produce these can seriously impact the value of your claim.
What you can do?
Using a specialist R&D Tax Credit consultancy to oversee your claim with a fresh perspective, can help you to maximise your claim by ensuring that no important qualifying elements of your R&D spend are missed or erroneously left out because they are thought not to qualify. However, making sure that, from the outset, you have a properly thought-out IP strategy, that takes into account your R&D and how it is managed, can be equally important. For example, you may be operating in a crowded technical field, and performing some patent searching and landscaping could help you to, not only clearly pinpoint the ‘technical uncertainty’ that will help to maximise your R&D Tax Credits claim, but also to keep a watch on what your competitors are doing in the same field. We can help with this, and more, to help you to ensure that your R&D is focused and that you are not investing resources in R&D that may not be eligible for R&D Tax Credit claims.
Book your free initial consultation now, to see how we can help.
Tel: 07714 797135 Email: info@strachanip.co.uk
