Posts Tagged ‘R&D’
I was horrified to read that less than 10% of SMEs in the UK reclaim R&D tax credit.
Having just been through this at Mind Candy I can see why the process has the reputation for being difficult and confusing.
I love small companies, and the amount of tax credit available in the form of a cash rebate to those that are loss making can make a real difference to cash flow, especially in these turbulent times. In this case the cash credit payable is equivalent to £24 per £100 of qualifying expenditure, quite a significant sum. The company must surrender part of its loss so that it can’t be used against future profits. It must also have paid PAYE and NICS on remuneration in the period of an amount at least equal to the tax credit claimed.
For companies making a profit, or who have no PAYE payments in the period, the tax credit works by providing an enhanced loss.
There is a significant lack of readable information available about reclaiming, even the information given on the HMRC website is confusing. I must say though that the R&D unit that we went through (based in Cardiff) were very helpful indeed.
There are several points that I hope will help other SMEs to reclaim:
*The R&D credit is not reclaimable on the short form CT600, only on the longer form, this is available from the HMRC website.
*Download the information available from the HMRC website, you will find an excel template to help you to work it out, information about what you can and can’t reclaim, and a guide to the questions that need to be addressed in respect of a claim.
*Create an overview document that introduces your company/products/services and answer the questions mentioned above clearly, we included:
*What was the scientific or technological advance?
*What were the scientific or technological uncertainties involved in the project?
*How and when were the uncertainties overcome?
*Why was the knowledge being sought not readily deducible by a competent professional?
*Pull together evidence for the work claimed in whatever form – we submitted architecture diagrams, developer commit logs, payroll records and invoices for consumables.
*If you have a patent, it can be influential to a claim, include it.
*Your accountant (if you have one) may not have mentioned the R&D tax credit to you, mention it to them, they can help you.