Research and Development (R&D) is one of the jewels in the crown of the British economy – but tax reliefs remain underutilised
The Oxford/Astra Zeneca vaccine and genomic sequencing of the coronavirus are recent examples of the nation’s innovation during lockdown.
Research and Development (R&D) corporation tax reliefs support companies that work on innovative projects in science and technology.
The tax relief can be claimed by a range of companies that research or develop an advance in their field of science or technology. It can even be claimed in relation to unsuccessful projects.
There are different types of R&D relief, depending on the size of your company and if the project has been subcontracted to you or not.
The R&D tax credit scheme continues to grow in popularity each year, but the number of claims made is still well below the number of projects that may be eligible for this relief.
It is difficult to put an exact number on how much R&D tax relief goes unclaimed but previous attempts have estimated that as much as 80 per cent of eligible projects do not benefit from this tax relief available to them.
In many cases, businesses assume that this form of tax relief is only suitable for those at the cutting edge of digital technology or science, but the relief covers most research and development that can show it is:
- Aimed to make an advance in an area of science and technology
- Involved technological uncertainty
- Made efforts to overcome this uncertainty
- Couldn’t have been easily worked out by a professional in the field.
In short, if a company uses a technical specialist in their field to makes an advance, and they were not sure if they could achieve the scientific or technological aims of the project, you have got technical uncertainty and a potential claim if others could not have simply delivered a similar solution.
It is often down to the businesses’ accountants and advisers to spot the potential for a claim in their accounts, but this can be hard to spot without the right expertise.
In many cases, it is only where an accountant digs deeper into a company’s finances or has a strong bond with clients that it can spot the potential for a claim.
You know your business so give us a call to talk about it further
For help and advice on R&D tax reliefs, please contact Victoria Nicoll at WMT – Chartered Accountants today.