We work in the Education Sector. Can we claim R&D Tax Credits?

Date: 22nd November 2016

We are a professional company working in the Education sector providing high quality education, skills and employability provision. We are dedicated to Employability and Skills training in education, the Welfare to Work initiative and to the Creative sub-sectors. Our clients include main UK Government service and provision contractors.

We have recently invested in developing a bespoke IT solution which allows us to operate more efficiently, provide high levels of security and gives the best service to our clients. The majority of the subcontracted costs that we incurred were claimable for R&D Tax relief and also, the cost of our own employee time spent on trialing and testing the new solutions also qualified for the claim. It allowed us to significantly reduce our corporation tax bill and receive a rebate from HMRC.

If you are a professional business operating in the Education and Training sectors, then IT, internet or intranet solutions, which improve your processes, may well qualify for a tax rebate.

Non-technical businesses are eligible to make an R&D Tax claim and the HMRC rules are clear.

For a R&D Tax Credit claim, the following should apply:

  • You own the process and have either developed it internally or have asked a subcontractor to develop it for you.
  • In your view, it is an advance on other solutions available to you and offers performance improvements.
  • The software solution required development and there were initially some uncertainties to overcome which required trialling (almost certainly the case with a new software based project).

You can claim up to 65% of the sub-contractor invoices and 100% of relevant staff costs directly allocated to developing and trialling your solution. 

Here’s how to confirm whether you are eligible.

Call an R&D Tax Credit specialist. Most won’t expect to charge for this initial advice on whether you should claim. The better one’s will even estimate roughly what it’s worth to you and at this stage, it should cost you absolutely nothing.

If you do have a potential claim, then the specialist can prepare a Technical Justification for you and advise you on what to claim. The good news is that your specialist will help you claim back for the two previous full years as well as for the current year.

If there isn’t a reasonable claim then Competent R&D Tax specialists will not waste your time (nor theirs!), and so nothing ventured, nothing gained. It’s well worth the call.

What will it cost to claim?

Most R&D Tax specialists charge a success fee. You should expect to pay around 18% of what you receive as a rebate, corporation tax credit or relief.

Make sure that you use your own Accountant to submit the claim. Some R&D Tax firms try to up the fees by recommending their own Accountant. It’s just not necessary….

Jaime Lumsden, Director

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