Investment in innovation is highly beneficial and can provide you with valuable R&D relief, which has helped businesses move forward and proved vital during the pandemic to streamline companies’ cash flow. R&D claims involve financial and technical complexities and require expertise to prepare maximised claims. If you want to tailor a robust claim, you need to do a lot of research to avoid missing out on incentives. First, you need to have a clear idea of what research and development projects you are undertaking, what advancement you are trying to seek, and how is it being sought. This blog will provide you with tips to ensure you make maximised and optimised R&D relief claims by planning your R&D claim more effectively.
Inculcating these steps and tips in R&D project plans and R&D relief claims will ensure you don’t miss out on any benefit:
1. Plan Innovative Projects
You might not realise, but there is huge potential for innovation in the UK. If you are undertaking projects to seek advancement in science and technology, then you are eligible to access R&D Relief. R&D incentives have a highly positive impact on your business, and it provides you with a financial boost and relief from tax. Therefore, it is important to plan innovative projects to add more value to your business. It is also crucial to understand what is included in research and development; there might be R&D projects you are already working on without realising. Understanding eligibility for R&D claims will help you plan your innovative projects in a better way.
2. Keep Track of Your R&D Projects
HMRC has provided comprehensive guidelines regarding rules that govern R&D relief claims, including writing the technical narrative of your R&D project with detailed calculations of your qualifying R&D expenditure. Therefore it is advised to keep a detailed record of your R&D projects and expenditures. This will help you create a robust claim without missing out on any qualifying expenditure. Also, ensure keeping a record of all the data you might need while making an R&D relief claim. This will save time in data gathering for the claim and mitigate the chances of any inaccuracies in the claim.
3. Understand What You Can Claim For
Knowing what you can claim for is very important. The amount of your R&D relief or credits claim is determined by the qualifying R&D expenditure you mentioned in your technical narrative. This means you need to mention every cost which qualifies for the R&D relief claim according to HMRC’s guidelines. In this way, you will get maximum relief or credits. It is essential to be clear about what you can claim because incorrect or erroneous claims can result in HMRC enquiry.
4. Understand what can impact your R&D claim
Receiving government grants and funding might impact your R&D relief claims. It is also crucial to know what can affect your claim and to what extent.
• Government grants:
Most businesses have the misconception that they are cannot claim R&D relief as they have received government grants, that’s not true for all cases. If you have received notified state aid, then it will restrict access to the R&D SME scheme, but still, you can claim through the RDEC scheme. The non-notified state aid might impact your project’s eligibility depending on the funding i.e.
- If you received funding for the whole project, then you should claim R&D relief under the RDEC scheme.
- If grants you received didn’t contribute to the R&D project, then it won’t have any impact on your R&D relief claim.
- If grants partially contributed to the R&D project, you can claim via both schemes, i.e. via RDEC for R&D cost covered by the grants
and via SME for remaining eligible expenditure.
• External workers and Subcontractors
Understanding considerations of external workers and subcontractors for R&D claims can be helpful in producing an optimised claim.
• Linked companies
If your company is part of some larger organisation, it will be considered as linked. Linked companies must take finances and employees of larger umbrella companies into account while making R&D relief claims. Access of small linked companies to SME schemes is often restricted, and they are required to claim via the RDEC scheme.
5. Utilise Losses of Your Company
Loss-making companies can also claim R&D tax credits and R&D relief. Surrendering your loss allows loss-making companies to receive cash credits from HMRC.
6. Create Strong Technical Narrative
Your technical narrative is what HMRC considers to assess your eligibility for the claim. It also represents the amount of R&D relief or credits you are claiming. Therefore, it should be written clearly without any ambiguity or confusion. Any miscalculation or error can make you face an enquiry by HMRC or a reduction in the claim.
7. Consult R&D Relief Specialist
Claiming R&D relief with R&D specialists is a lot easier. As R&D specialists have years of experience in tailoring robust claims, their expertise can benefit your claim. Doing claim yourself can be risky. It is better to let the expert do the work. Claiming with R&D tax credits specialists can maximise your claim without any risk of errors or enquiry.
Contact our proficient and adept R&D tax credits specialist and get maximum R&D relief or R&D tax credits within a few days.