Too busy innovating to claim innovation tax relief? by Areande Tax Company (2024)

Back in 2000, the UK Government unveiled R&D tax relief specifically to encourage scientific and technological innovation across Britain. It works by allowing businesses to recover up to 33% of development costs that are invested in innovation including advances in product, process, materials and software innovation, but it can be time-consuming claiming it. That’s why so many SMEs and large companies seek out a HMRC tax specialist such as Areande.

A huge advantage you can’t afford to miss

Did you know that r&d tax relief provides a relief against Corporation Tax (CT) which can reduce your tax liability in previous or future years? If you are loss-making for tax purposes, it can enable you to receive a tax credit payment by ‘swapping’ your losses for cash.

There are two variants of the scheme, one for SMEs and one for large companies. Whichever your company falls into, Areande the HMRC tax specialist can help you to claim the r&d tax relief you deserve.

It’s worth noting that r&d tax relief can apply to any industry and any sector. The company’s size and profitability will not impact on your ability to make a claim. Yet despite the Government’s best intentions, unless you are a HMRC tax specialist specifically in the innovation and r&d tax relief area, claiming can be a painstaking and cumbersome process.

So, which projects can qualify as R&D?

To qualify for R&D tax relief they have to be part of a specific project with the aim of finding an advance in science or technology. It also needs to relate to your company’s existing trade or one you intend to start. To qualify you’ll need to demonstrate:

•The scientific or technological advance you intend to find

•That the advancement is a step forward in technology as a whole, not simply in the knowledge of your company

•The uncertainties you came across in the project, such as when knowledge of how to achieve something wasn’t readily available when the work began. You’ll need to explain the activities undertaken in trying to overcome the uncertainties. Activities which look to resolve uncertainty include prototyping, sampling, trial and error, testing, clinical trials and experiments

•Why the outcome couldn’t have been predicted right from the start

Qualifying projects can research or develop a new process, product or service. They can also just improve an existing one, so qualifying R&D expenditure is incredibly broad. It can apply to many industries and sectors.

How much could your company be missing out on?

The amount you ultimately receive depends on the amount of qualifying activity you carried out and the costs incurred. But that’s not all, it also depends both the tax profile and size of your company as this will determine the scheme under which your claim will fall under. For the purposes of the r&d tax relief, a SME is a company that employs fewer than 500 full-time staff and either has a turnover of less than €100m; or gross assets of less than €86m.

If your company is above these limits, your claim should be made under the Research and Development Expenditure Credit (RDEC) scheme.

Here are just a few examples and an indication of typical amount that Areande have claimed for their clients as of 2020:

Agriculture: £XXX,XXX

Construction: £XXX,XXX

Engineering: £XXX,XXX

Food & Beverages: £XXX,

Manufacturing: £XXX,XXX

Software: £XXX,XXX

You can find further information on r&d tax relief at HMRC Revenue & Custom’s Research and Development Tax Credits Statistics report.

What expenditure can be claimed?

There are specific project-related costs that you can reclaim, as long as they were incurred after you’d identified the uncertainty to be overcome (see earlier above) but before you’d achieved the outcome you were looking for, or work on the project came to a halt.

Capital expenditure is usually excluded from r&d tax relief unless the expenditure has been capitalised as an intangible fixed asset, such as:

•Full time staffing costs

•Subcontractors

•Externally provided workers

•Consumables

•Clinical trials

•Software licenses

•Utilities

What sets Areande apart from other tax specialists?

Areade harness technology to make claiming r&Dtax relief simple, enabling you to concentrate at what you specialise in: innovation.

Because they are HMRC tax specialists, they streamline the entire claim process and ensure that it runs smoothly, identifying and claiming the opportunities and incentives available for you.With Areande, companies can be sure that their claim is in safe hands.Any risk of an HMRC enquiry is eliminated through their rigorous quality assurance process.

Where do I start?

To quickly and efficiently claim r&d tax relief for your company, start by completing a simple online form [link to Areande online form]. This helps them to assess your eligibility. An HMRC tax specialist will then guide you through the streamlined process.

Delivering innovation in any sector isn’t easy, but at least claiming r&d tax relief can be made simple with Areande.