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R&D Answers: Why Does So Much R&D Tax Credit Go Unclaimed?

Date: 2nd February 2012

Why have many companies with potentially valid claims either not claimed at all, or not claimed enough?

There are many reasons why research and development tax credits go unclaimed. They range from companies thinking it is too complex and time consuming to assess qualifying work and make a claim for Research and Development Tax Credits; to misunderstanding the scope of qualifying conditions; or having tax accountants who do not fully understand what does and does not qualify; or they just do not know about the R&D tax credit scheme.

Some companies have made claims which have been questioned in the past on justification grounds by HMRC and they subsequently decided it was too much hassle. We work with the accountants who handle the financial side of the claim and many admit to having little or no understanding of the technical qualification aspects of the R&D, and some simply avoid being involved.

If the view taken is too narrow, the company may be under claiming and equally there can be a danger of over claiming. In most cases the judgement of exactly when technological uncertainties were resolved will rest with company management and my advice is to be conservative in this judgement.

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