FAQs about R&D

Below are some of our most Frequently Asked Questions regarding R&D

How far back can I make a claim for R&D Tax Credits?

According to: Paragraph 83E(1) of Schedule 19 to the Finance Act 1998 – You can submit an R&D Tax Relief claim at any time up to the first anniversary of the filing due date of the company tax return for the accounting period in which the claims is made. What this essentially means is that a business can make a claim for R&D tax relief going back 2 accounting years.

How long does it take HMRC to process an R&D Tax Credits claim?

The aim for HMRC is to process claiming applications within 28 days.

However, a lot of variables can affect the length of the process. This could change depending on the complexity of the claim itself where lots of enquiries will be made with the accounting figures along with the technical report.

Even external factors can influence the length of the process such as the recent COVID-19 pandemic and the time of year that the claim is submitted with March and December being the peak accounting periods, making it longer for claims to be submitted.

How much do you charge for your service?

We operate on a no-win-no-fee and at a very competitive fee of 5% on all the claims that have been processed more than once before.

Can I claim for failed projects as well as my successful ones?

Yes – the objective of this scheme is to provide incentives for companies to undergo Research & Development and explore their innovative capabilities. This is the investment of attempting to create or develop existing processes, services and/or products.

What is R&D?

R&D is the abbreviation of Research and Development and was introduced by the Government in 2000 to encourage UK businesses to invest and enhance the fields of science and technology. It is an incentive to reward businesses across all sectors by allowing them to claim back some of the costs involved in advancing innovations.

Is there a limit to how often my business can claim R&D Tax Credits?

No – There is no limit to the amount you can reclaim R&D Tax Credits. So long as your business is continuing to be innovative with its processes/products/services then you can reclaim as often as you are being innovative.

How much can I claim?

Your company size will influence how much you can for. SMEs can claim around 14-33% on any costs which qualify. For large companies, a credit amount of 8.8% is available under the Research and Development scheme.

What Happens if the R&D work that is undertaken by my company, subcontracted to us by a large company?

One of the conditions for a company to make a claim under the SME scheme is that the expenditure is not incurred by carrying out R&D as a subcontractor.

However, if this was the case, the SME can make a tax credit claim but under the Large Company Scheme. The reward of this scheme is a 25% deduction for qualifying R&D expenditure.

What documents would I need to prepare the claim?

All that is needed for us to start, is a copy of your accounts and CT600.

What happens if some of the R&D expenditure has been funded by a grant or subsidy?

If a company received a grant for a project, they will only be able to apply for the tax relief under the Large Company Scheme.

Highly recommended to speak to our R&D Tax Specialists as there’s a lot of fundamental factors that can affect the nature of the claim.

Can loss making companies claim?

Loss making companies can claim under the SME scheme from HMRC. They also have the option of not surrendering the R&D loss but carrying it forward/backwards against profits instead.

How long does it take for me to get my money through?

On average, a claim is submitted within 1-2 days, when HMRC have received our submission, they pay out the money within 4-6 weeks.

What is the difference between the SME and RDEC scheme?

The SME scheme is for small-medium sized enterprises (under 500 staff), and the RDEC scheme is for large companies (over 500 staff). SME’s can sometimes claim under the RDEC scheme depending on circumstances.

Can sole traders or partnerships claim?

Unfortunately, only companies that are subject to Corporation Tax can claim Research & Development Tax Credits. A joint partnership which is made up of limited companies could qualify with each company depending on how the expenditure was split within the partnership.

Is there a minimum level of qualifying expenditure required?

No, there is no restriction since it was removed in 2012.

Can I claim on capital expenditure?

In general, you cannot claim on capital expenditure because R&D expenditure relates to revenue expenditure. However, it is sometimes possible under the intangible assets regime to capitalise revenue expenditure, meaning that it could still qualify for tax credits if it can be deducted from the profits in the tax calculations.

Is an R&D Claim worth it?

Definitely! We believe that Research & Development Tax Credits are worth applying for whether you are a small-medium sized business or a large-limited company. It can generate extra revenue if you have spent money on qualifying activities.

How to qualify for R&D Tax Credits

You can qualify for R&D Tax Credits if you have R&D Projects with the aim to work towards scientific or technological advancements in improving new or enhanced products, services, or processes.

Are R&D Tax Credits Government Aid?

The SME scheme is classed as a ‘Notifiable State Aid’, this means that if you have already received a State Aid grant for the project, it can affect your claim.

Do you have a minimum claim amount?

Our minimum claim amount is £1500, we would never advise our clients to go through the process if the claim value is lower than this as it would not be optimal for them.

Will HMRC investigate my R&D Tax Claim?

Only a small handful of claims become subject to a HMRC enquiry, if this is the case we specialise in R&D Tax Credits and have extensive experience in overcoming hurdles such as this to increase chances of success.

What are the key qualification questions?

The questions asked for submitting an R&D Tax Claim to HMRC will be solely for the purpose of demonstrating a qualifying project. Just a few examples of questions are:

– How were the uncertainties overcome?

– What was the advance in knowledge or capability in science or technology that was being sought

– What was the baseline in the science or technology from which the advance was sought or in what way does the project go beyond what was the current state of knowledge?

See what our R&D Tax Credit Specialist has to say