Making a profit or loss? It doesn’t matter for R&D Tax claims…

Date: 9th November 2016

R&D Tax Relief is meant to encourage innovation and the SME scheme particularly, is targeted towards small and medium sized businesses which may be in profit or making a loss.  It just doesn’t matter and, if you are in loss, this can be a surprisingly rapid source of much needed cash.

Typically, the claim is processed with a cheque from HMRC arriving in less than 5 weeks….straight onto your bottom line, free of tax.  It can transform a small struggling business which has been investing in new products, services or software bases solutions.

Can I claim? 

R&D Tax Relief is mostly about recovering PAYE salaries and subcontractor costs that you have spent on product, service or software based developments. It covers your investment in developing new hardware, software, or even process improvements such as manufacturing upgrades or web based solutions. It can pay for scrap costs and some utility costs. 

Best of all, it is irrelevant whether your projects succeeded or were abandoned. What matters is that you are trying to be innovative. 

Especially helpful is that your initial claim can be for costs incurred over your past two financial years.

There are four rules: 

  1. Are we an innovative business? 
  2. Do we use science and technology to improve our products or services? 
  3. Do we take the financial risk in developing our services or products?
  4. Do we have technological uncertainties to overcome?

If this sounds like you, then you should talk to an R&D Tax specialist.   It costs nothing to find out whether you should claim and if the answer is yes, then the claim goes in through your own Accountant.

Jaime Lumsden, Director

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