R&D Tax Credit Explained

If you’ve invested in R&D, or if you aren’t sure if what you’ve done is R&D, we can identify whether you’re entitled to tax relief. We are experts in R&D tax claims, with over 13 years’ experience in submitting successful claims.

For many businesses, R&D is a big financial commitment with potentially huge rewards – giving a valuable advantage over your competitors. In many cases, businesses don’t realise they are doing R&D; they just see it as improving the way they work.

R & D tax relief: What you need to know

What is R&D tax relief?

R&D tax relief is a government initiative that allows any company who is subject to UK Corporation Tax to claim back a portion of their tax liability in relation to money they have spent on areas of their work which can be classed as research and development.

An increasing number of companies around the UK are becoming aware of their potential to claim for R&D tax relief. A successful claim will be dependent on your ability to gather evidence of your R&D activities and then present in a suitable format to meet R&D tax relief expectations.

 

 

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How do you gather evidence for an R&D tax relief claim?

Essentially, in order to qualify for R&D tax credit, your claim needs to demonstrate to HMRC that your research is not only technologically innovative, but also ahead of other options currently available.

That’s where our experts here at Cowgills come in. We take full responsibility from beginning to end; visiting you, gathering evidence, putting your claim together and answering any questions raised by HMRC.

All whilst making the process simple, minimising disruption so that you can concentrate on running your business.

We have a wealth of experience in dealing with R&D tax claims, with many of our team having worked in the field since the inception of R & D claims in the early 2000s.

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Do you need full records of activities and/or spending?

If your records are incomplete, this can certainly be a challenge to a successful claim, but don’t give up quite yet! Our team of R&D tax relief specialists will be able to review whatever evidence you currently have, and provide an assessment on whether it meets the HMRC criteria.

It is also worth noting that if this is your first claim for R&D tax relief, they can often be slightly more lenient in this area. 

Our team of R&D tax credit specialists will be able to discuss a potential claim on your behalf, basing it on a “reasonable assessment” with regards to time estimates in relation to R&D tax relief qualifying activities.

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What are R&D qualifying activities?

There are a range of different activities and spending which could qualify for inclusion in a claim for R&D tax relief.

As mentioned above, an R&D tax relief claim will not only have to provide evidence that such activities took place, but also that they provide a level of innovation and/or advance current available options.

Our team can help you identify ways in which this took place, but in basic term, activities that could qualify for receiving R&D tax credit include:

  • Creating a new product
  • Creating a new process
  • Creating a new service
  • Improving an existing product
  • Improving an existing process
  • Improving an existing service

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Which businesses can claim for R&D?

Any business in the UK can potentially make an R&D tax relief claim, but 71% of claims currently come from businesses in three sectors:

  • Manufacturing
  • Information & Communication
  • Professional, Scientific & Technical

The average R&D tax relief claim is £53,876.

In the previous three years, Cowgills have saved our clients over £6m; that’s an average of £88,000 per client!

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Our experience with R&D tax claims

If you’ve invested in R&D, or if you aren’t sure if what you’ve done is R&D, we can identify whether you’re entitled to tax relief. We are experts in R&D tax claims, with over 13 years’ experience in submitting successful claims.

We have a wealth of experience in dealing with R&D tax claims, with many of our team having worked in the field since the inception of R&D claims in the early 2000s. In terms of our R&D tax relief claims, over the previous three years Cowgills have saved our clients over £6m; that’s at an average of £88,000 per client!

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Can you still claim if you outsourced your R&D activities?

Many companies assume that if they didn’t carry out all of their R&D activity in-house then they would not qualify for a claim. This is not strictly true, as even if you subcontracted some activities out,  you may still be eligible to claim back a percentage of these costs under HMRC’s current criteria.

Once again, you need not worry about exactly how to structure your claim in terms of presenting who carried out what proportion of activities. Our R&D tax relief experts will be able to explore these matters with you and ensure you present your claim in the most effective way possible.

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Why is it important to use an R&D tax credit specialist?

We are aware that there are a variety of sources claiming to offer advice and even to be able to present the claim on your behalf. This is even more prevalent online, where anyone can put together a website page and present a series of claims on what they can offer.

Sadly, not all of those who offer services in R&D tax relief claims do so with the level of diligence or competency that is required. We ensure our clients’ claims are presented by a trusted expert, in order to ensure that you are awarded the full R&D tax credit you are entitled to due to your claim being presented in the most effective possible manner.

Additionally, we recommend using a specialist because in the worst possible scenario, companies who entrust their claim to somebody who is careless, hasty or even dishonest in their process leave themselves open to having their claim dismissed entirely, or even seen as fraudulent by HMRC.

For more information, you can get in touch with us today, while for an initial estimate on your potential claim value, you can make use of our R and D tax credit calculator.

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How much R&D tax relief could your business claim?

SME

Fewer than 500 staff and either less than:
£100 million turnover or £86 million gross assets.

Large Company

Greater than 500 staff and either more than:
£100 million turnover or £86 million gross assets.

If you’re an SME with;

  • less than 500 employees,
  • annual turnover of less than £100million, and,
  • balance sheet assets of less than £86million,

You can claim back up to 33% of your costs.

  • £3.5bn was claimed in R&D tax relief in 2017 (25% increase from the previous year)
  • Only £350m of this was claimed by companies in the North of England
  • 85% of claims came from SME’s

If you’re a large company with;

  • more than 500 employees, and
  • annual turnover of more than £100million, or
  • balance sheet assets of less than £86million.

You can claim back up to 13% of your costs.

  • £3.5bn was claimed in R&D tax relief in 2017 (25% increase from the previous year)
  • Only £350m of this was claimed by companies in the North of England
  • 15% of claims came from large companies

R&D Tax Relief Calculator

Receive an estimate on your possible claim value with our calculator tool

Simply drag your slider across to your annual R&D spend and you’ll be able to see your potential claim value

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Your claim value estimate

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