Are you eligible for R&D tax relief?

It is estimated that only 10% of eligible companies claim the R&D tax relief to which they are entitled, so small business owners need to consider whether they are eligible.

A company can claim the tax relief if it “seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty – and not simply an advance in its own state of knowledge or capability”. This is not the most clear definition but in addition to what can be considered pure R&D (such as pharmaceutical research) it would include such things as software development or research to create or improve processes, products or services.

The key to a successful claim is to prove to HMRC that the R&D project meets the requirements fully and that the constituent activities and costs qualify. To be able to do this it is necessary to keep accurate records of times and costs throughout the project from planning to completion.

In order to increase the likelihood of a claim being processed smoothly applicants may choose to use a R&D tax specialist to assist in the preparation of the claim by providing the information that HMRC would expect to see. This would include a company background, a description of the R&D project and why it meets the official definition and a breakdown of qualifying costs.

Using a third party tax specialist may increase the likelihood of a successful claim but it comes at a cost. R&D tax specialists charge a fee based upon a proportion of the tax saved so it is in their interests to maximise the claim.

If you think that you are able to claim for R&D costs then please contact us.