There is a common misconception in business that R & D does not apply to my business, we have outlined the seven most common myths surrounding claiming R & D tax credits.
1. You must be a firm in the technology or science sector
2. Only large companies qualify
3. The process of applying for R&D tax credits is too complicated and time-consuming
4. A project was carried out in the past so it is too late to make a claim
5. You must be involved in ground-breaking innovation
6. The R&D needs to be successful
7. Your business must be profitable
1.You must be a firm in the technology or science sector
The assumption that these tax credits only apply to businesses whose employees wear white lab coats is false. Amas have helped firms from a variety of sectors with successful R&D claims from a waste management company to a cleaning firm. Thus, the industry your firm operates in should not be what is stopping it from making an R&D claim and any project expenditure.
2. Only large companies qualify
There is no requirement with regards to firm size, small and medium-sized enterprises (SMEs) are eligible to claim. Two separate schemes are in place for SMEs and large companies with different tax relief rates. It is not the size of the business that affects their eligibility but the work they do, so this should not be a reason for withholding a claim.
3. The process of applying for R&D tax credits is too complicated and time-consuming
While it can be an onerous process, the combination of your firms in house knowledge and Amas’s R&D tax expertise, makes the process effortless. At Amas we take on the hard work for you and with minimal input from you, make the best possible assessment of your firm’s claim.
4. A project was carried out in the past so it is too late to make a claim
A backdated claim can be made for R&D tax relief for projects that took place two years before the end of the accounting period. For example, on the 31st December 2018, projects from the 31th December 2016 will still be eligible. So do not refrain from making a claim because your R&D was not carried out recently.
5. You must be involved in ground-breaking innovation
Most businesses are attempting to make an advance in a product or process and there is almost always uncertainty regarding how to achieve it, it is likely that it will qualify. This does not need to be something that will blow minds. A well-known Michelin-starred chef in Nottingham had a successful R&D claim with the development of an aerated chocolate dessert.
6. The R&D needs to be successful
R&D cannot be expected to always have a successful outcome. Subsequently, it is an effort-based credit and rewards those firms that have applied best efforts to resolve an uncertainty with their research. For example, an experiential design studio qualified when they designed and created the world’s largest disco ball. However, even if the disco ball had ended up not being the largest on the planet, they would have still gained the tax credits due to their attempts.
7. Your business must be profitable
Even loss-making firms can qualify for R&D tax relief. Some losses can be brought forward or surrendered for a payable cash credit from HMRC. As of 1st April 2015, the surrender rate is 14.5% for SMEs that prepare their accounts on a going concern basis.
Is your project eligible? Check your eligibility.
Discover more about our R&D Tax Credits and what we offer in our Hub or contact us on 01292 388 031 to see how we can help you.