A common misconception about the additional tax relief available to companies undertaking Research and Development (‘R&D’) activities is that it is only available for companies that are in high tech or scientific industries. However, this couldn’t be further from the truth.
R&D tax relief is a government incentive aimed at rewarding companies operating in any sector where they are investing in innovation by developing new products, processes or services, or indeed enhancing existing ones. The one obligation that must be common to such companies is that they are subject to Corporate Income Tax in the UK.
We have progressed claims for engineering companies, construction companies, technology and hospitality companies and also companies involved in various elements of the food and drink industry.
Businesses quite often deem ordinary day to day tasks as “part of the job,” however experience suggests that often these tasks involve a great deal of uncertainty being overcome and as a result the cost of these tasks will qualify as R&D activity. This includes any costs incurred on internal projects and HMRC also recognises that R&D may not always be successful. Therefore, costs incurred on abandoned, delayed and/or unsuccessful projects can also be included in an R&D tax relief claim. Qualifying expenditure on a project can quickly become significant and covers staff costs, consumable costs, subcontractors and some other overheads.
With cashflow even more important now than ever, R&D tax relief can deliver some invaluable additional cash resource for a wide range of companies from small start-ups to large conglomerates, whether profitable or loss-making. A successful claim can be vital and can result in a reduced Corporation Tax liability or a cash repayment from HMRC. Accelerating the preparation and submission of R&D claims will also speed up the timing of any cash benefits due.
If your company is not claiming R&D relief yet and it is innovating, it is time to consider the benefits it can deliver.
For further information or assistance, please contact Derek Gemmell or your usual Anderson Anderson & Brown contact.