Research & Development Tax Relief & Tax Credits
Dealing with R&D tax credits since its introduction back in 2000
What is Research and Development Tax Relief?
R&D (research and development) tax relief is available to companies carrying out qualifying research and development activities. Friend Partnership has substantial experience in helping companies to successfully claim R&D tax relief.
Corporation tax relief can only be claimed if it meets HMRC’s definition of R&D
Work that qualifies for R&D relief is required to be part of a specific advancement in science or technology, and must relate to the company’s existing or future trade that is based on the outcome of the advancement.
In order to qualify for the tax reliefs, companies are required to:
- Show advancement in the field
- Show that a professional in the field could not simply just work it out
- Show there was uncertainty
- Explain how they tried to overcome the uncertainty
There are two types of relief:
- SME R&D Relief for companies with less than 500 staff & Turnover under £100 million or a balance sheet total under £86 million
- R&D Expenditure Credit for larger companies and some SMEs who have been subcontracted to do work by large companies
The main features of R&D tax relief are:
- Enhanced corporation tax deduction of up to 86% of revenue expenditure on R&D for SMEs
- Payable credit of 10% of any R&D tax losses which are surrendered for SMEs (R&D intensive companies continue to claim credit at 14.5%)
- 100% capital allowances for any R&D capital expenditure
HMRC have a specific R&D task force
In March 2021, HMRC proudly announced the creation of their R&D task force. Its job is to undertake enquiries into R&D claims that companies have made to ensure that they are not fraudulent or incorrect.
HMRC knows that there have been “abusive R&D claims” either as a result of negligence or dishonesty. HMRC’s estimate of the loss due to incorrect or fraudulent claims tops £600 million – and they want it back.
My claim has been accepted, so I’m in the clear, right?
HMRC operates a “process now, check later” approach to claims. Unfortunately, we are now very much in the checking phase and due to increases in their R&D investigation manpower the number of investigations is on the increase.
What’s the worst that can happen?
Excessive or incorrect claims will be disallowed. Repayment of any tax refunds will be sort, along with a penalty which in extreme cases could be equivalent to 100% of the tax at stake.
You need expert advice and assistance in these situations
Friend Partnership have been dealing with R&D tax credits for over 20 years, since their introduction back in 2000. We have gained a detailed understanding of the R&D tax credit system. This depth of knowledge and experience, coupled with our successful track record defending clients from HMRC enquiries in all areas of tax and accounting, makes us worthy of an hour or so of your time for a no obligation chat about your current situation.
Make A R&D Enquiry
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