RESEARCH & DEVELOPMENT TAX CREDITS

SUPPORTING INNOVATIVE COMPANIES WITH R&D TAX

Research & Development (R&D) incentives claims are a core part of the support the CP Innovation team offer companies. Take a look at the information below which will tell you more about R&D incentives and the potential benefits for your company. Then talk to us.

WHAT IS R&D FROM A TAX INCENTIVES PERSPECTIVE?

The R&D tax incentives regimes have been designed to incentivise companies incurring costs undertaking scientifically or technologically challenging projects. It is called “R&D” but the sort of projects which can qualify are much broader.

R&D for tax purposes occurs when businesses actively develop new products and processes OR “appreciably improve” existing ones. It helps businesses remain competitive in their marketplace, whilst striving to push the boundaries of what can currently be achieved in their industry. However, we’ve found “R&D” is a bit of a red herring. Taken at traditional face value it sets the bar in the wrong place in people’s minds about what qualifies and what doesn’t.

We remove the misconceptions. And we’ll show you there’s a lot more to R&D incentives than just brand-new blue-sky research and thinking (usually associated with the likes of rocket science and pharma).

Put simply, it comes down to two things, CHANGE and CHALLENGE:

• Change: You’ve made some changes to a product or manufacturing process in some way, e.g. quicker, lighter, faster, stronger, new materials, increased durability etc, and
• Challenge: Trying to make these changes and get them to work wasn’t easy. They involved some testing, time, head-scratching! You weren’t sure how to do them from the off, despite your years of experience in the industry, making similar things. It may even be that the challenges were too great and you didn’t manage to overcome them – these projects (and associated costs) can still be claimed for!

So, if you’ve made changes that took some thought and sleepless nights – it’s time for us to talk.

HOW DO R&D TAX CREDITS WORK?

This is the package of financial support provided to UK businesses by the Government via the tax system to encourage R&D activities. In other words, a mechanism by which to reward companies for the development of new or improved products, processes, and services.

The CP Innovation team is experienced in working with companies to make sure they’re providing the information HMRC needs. Our reputation is based on the quality of our submissions, providing HMRC with what they need to make a positive assessment of your incentives claims. We will also tell you if we don’t think your claim will be successful based on current HMRC guidance!

We’ve worked on R&D tax credits and incentives since it all started in 2000. And our Tax Partner Chris Knott is involved in multiple Working Practice Groups seeking to raise standards in the R&D incentives claims industry. Specialising in technical areas such as Engineering and Manufacturing (everything from automotive to aerospace, chemical to nuclear), Food & beverage, IT, Pharmacology and Chemistry. So, when it comes to your business, whatever the industry, we know what we need to find. We have a proven ‘CP way’ of doing claims that works. Our experience means we understand what exactly can be claimed and what red flags to avoid.

Over recent years there has been abuse of the R&D tax regime by unscrupulous advisors. HMRC increasingly carry out compliance checks and it can be challenging and time-consuming to get claims approved by them. We’re confident in our approach and we’ll be by your side from start to finish.

WHAT R&D TAX INCENTIVES ARE AVAILABLE TO MY BUSINESS?

There are three types of incentives available, and each one has a specific name. If you hear anything else, it will likely be a collective name for some or all of the below:

HOW MUCH IS AN R&D TAX INCENTIVES CLAIM WORTH?

The amount that your business receives depends on two factors: (i) the type of relief claimed (R&D tax relief, R&D tax credits or RDEC); and (ii) the amount of qualifying R&D expenditure.

As an illustration, for £100,000 of qualifying R&D expenditure, the benefit under each incentive is as follows: