R&D Tax Credits – does your business qualify?
R&D is often thought of as being something the tech or medical industries do and not something companies from other industries would get involved in. But when there is an opportunity to get Tax Credits from HMRC for costs involved in R&D projects, there is a good reason for all companies to consider what they do and if this could apply to them. What is most surprising is the type of projects that can qualify for R&D tax credits. Far from being the preserve of tech and medical companies there are many examples of companies in many different sectors who are claiming the credits. Examples include;
- Accountants who moved into new offices and at the same time creating and implementing a different corporate infrastructure to facilitate the growth of the business.
- Construction companies looking at new processes, material and ways to build.
- Catering businesses research news ways of cooking and preparing food.
These are just a few examples in different industries, but the principal applies no matter what your business does. For tax purposes HMRC define it as “R&D takes place when a project seeks to achieve an advance in overall knowledge or capability in a field of science or technology”. It is the definition of science or technology that has provided opportunities for many businesses who would not think they qualified. It is also worth highlighting that qualifying expenditure benefits from an enhanced tax deduction significantly reducing corporation tax liabilities and specifically:
- If it is made for a previous year it is possible to get a corporation tax refund
- If there are no or low profits it is possible to claim a cash repayment in lieu of the enhanced expenditure
In either case it generates a cash benefit in real terms. Over the past couple of years we have worked with clients and HMRC to define a number of projects under this scheme so if you think there may be opportunities for you, contact Phil Dickinson or the team. You can also see the HMRC information here.