Nine in 10 businesses we speak to haven’t tried to claim R&D tax relief because they don’t think they’re eligible, writes Anthony Doran, managing director of R&D Tax Credit specialist Recoup Capital.
As a result, businesses are leaving millions of pounds on the table in research and development (R&D) tax relief. HMRC reports that only 5% of eligible firms claim under the relevant legislation.
Why are so few businesses leveraging R&D tax credits?
It’s a highly misunderstood area
R&D tax relief is a government scheme administered by HMRC that gives UK companies the ability to claim on their research and development activities.
‘Research and development’ activities don’t necessarily mean work conducted in a lab or specialist R&D division.
Maybe you’re building with carbon neutral in mind. Or perhaps you’re improving the efficiency of buildings to deliver sites faster. Even tackling the challenges involved with regulation changes could see you qualify for R&D tax credits.
The government wants to reward businesses achieving such technological breakthroughs, and it will do so handsomely.
The typical SME can reclaim up to 33% of qualifying expenditure in the form of corporation tax credit. For large companies, it is usually 13% of your qualifying R&D expenditure under the RDEC scheme.
It’s easier to claim than you think
Working with an R&D tax specialist is the path of least resistance. We get better, faster results than standard accountants because our expert panel of chartered tax advisers specialise in this sector.
All that’s required from our clients is their financial information, such as the full accounts for the last two years (R&D claims can be backdated two financial years).
Then a call with one of our chartered tax advisors draws out the technical challenges faced or the innovations implemented around our clients’ products, processes or services. We handle the rest of the claims process.
Our clients see funds in their accounts between six to eight weeks. We have already claimed more than £10m for the construction sector this year with an average claim of £123,000.
A strategic tool for survival and growth
R&D tax relief can be used for more than improving cash flow. For example, one of our clients used their £615,211 rebate to develop its operations. Now they offer to design and install the utility infrastructure on new build sites for customers.
Also, R&D tax is one of the best survival tools available right now.
A lot of what’s available for businesses in this difficult climate – CBILS, waiving VAT, bounce back loans – is kicking the can down the road. R&D is much more powerful, essentially unlocking equity out of your last two years’ costs.
The bigger picture
With a specialist interest in the property sector, we want to see more and more businesses understand the opportunities out there for growth.
R&D tax relief is the conduit. By driving awareness, we aim to help businesses on an individual level thrive, so they can boost the market, create more jobs and further the UK economy.
A five-minute call with Recoup can determine your eligibility. Call us on 0800 3277514 today for a friendly, no-obligation chat.