It’s a subject that we have wanted to write a blog about for some time now as it’s a good channel for small business tax credits and tax benefits, but can be a bit of a minefield if you are not using professional accountants in London to guide you.
Have you developed anything new in your business in the last couple of years, or made significant improvements to a product already out there that keeps you ahead of the competition?
Have you faced technical challenges throughout the development of your business?
Positive Accountants are experts in helping clients prepare and file successful R&D tax credits claims to recoup what you have spent on innovation in your business, lowering your final Corporation Tax bill each year or even producing cash credits from HMRC.
Tax Credits and Benefits of Research and Development
Many small businesses and manufacturers are carrying out research and development that allows their business to innovate constantly. This action creates a host of benefits that can be legally used to increase profits, via tax credits.
Some of the criteria would be:
- The development of brand new products and services.
- Reinvigorating older products and bringing them up to date with research, adaptation and improvements.
- Delivering competitive advantages with the development of unique technologies.
- Increasing benefits to a businesses customers and stakeholders with more cost effective, safer and more efficient products and services.
Does My Project Count as Research & Development?
As professional and experienced small business accountants, we keep fully up to date with the latest rules on research and development benefits from HMRC.
When looking at a claim for research and development tax relief, HMRC appraises the request by looking for three main areas of scientific or technological activity.
R&D projects must: (taken from HMRC website)
1) Look for a Scientific or Technological Advancement
R&D projects must create an advance in science and technology in relation to a process, product or service (the advance must be for the overall field, not just for your business).
To progress with their work companies will look for an advance by undertaking a period of research, experimentation, testing, analysis and development.
2) Overcome Scientific or Technological Uncertainty
At the start of the project, there can’t be a straightforward solution. Businesses need to show that the challenge was complex and that conducting R&D was the only way to find a solution.
Businesses must explain what the blockers were and show a scientific or technological uncertainty on how to reach the solution.
3) Use a Systematic Approach
AIteration is the bare minimum of any R&D project. R&D must deploy systematic research, testing and analysis to develop robust solutions, you can’t just stumble across a solution. Results from the learning process through trial and error will steer companies towards success.
As part of our premium accounting services for small businesses, we see them as a valuable source of cash for businesses to invest in accelerating their R&D or possibly hiring new staff, both of which will help your business grow.
How do R&D Tax Credits Work?
There are a number of costs that can qualify for the R & D tax credits, and to make a claim for your business let us advise regarding the records you will require and assist with the application.
The traditional costs allowed in the claim are:
- Staff, including salaries, employer’s NIC, pension contributions and reimbursed expenses.
- Subcontractors and freelancers. materials and consumables including heat, light and power that are used up or transformed by the R&D process.
- Some types of software.
- Payments to the subjects of clinical trials
SMEs are able to submit claims for up to 33p for every £1 spent on the relevant qualifying R&D activities. Large companies are able to claim up to 11p for every £1 spent on qualifying R&D activities.
And Finally
For over 12 years as quality accountants in London we’ve helped businesses maximise their R&D Tax Relief claims. Not only do we have highly qualified tax experts, but we understand our clients’ businesses.
This uniquely allows us to understand and identify all the areas where you can claim R&D Tax Credits.
Positive accountants ,accounting services help your business grow.
