How Do R&D Tax Credits Work?
If you’ve done your homework on the UK Government R&D Tax Relief Incentive Scheme, then you’ll know the reason why R&D Tax Credits work. But for those companies who are new to this scheme, the main aim is to encourage companies to invest in research and development activities.
This incentive isn’t just to benefit companies that conduct R&D as part of their usual business activities (think lab technicians and precision manufacturing). R&D Tax Credits can also provide incentives for businesses that are unaware they have undertaken R&D activities (think construction companies, web developers and even new start-ups).
The fact is there are many businesses across many sectors that can benefit from the R&D Tax Relief Scheme. The problem, however, is that there are certain stigmas around making R&D claims. Business often conclude that the scheme itself is too complex; there isn’t enough time to put a claim together; you have to outlay resources to submit an accurate claim; and if the claim isn’t approved, it will result in wasted time and money.
Well we’re here to tell you that everything above is true! Unless you use the right R&D tax scheme specialist, in which case, there won’t be any risks. All your concerns about making an accurate R&D claim will be alleviated, including any worries that making a claim could impact negatively on your cash flow. So, is using a R&D tax relief specialist really worth it and how does this scheme work?
Is It Worth Using An R&D Specialist for R&D Tax Claims?
Understanding the R&D Tax Credit scheme isn’t easy. There are many different interpretations of what constitutes a scientific or technological advance, and not all of them are correct. Using a specialist in R&D, who fully understands and utilises the R&D tax scheme incentive, will enable your company to save time and avoid any confusion.
Your business can…
- Improve cash flow
With the right R&D tax relief specialist, you won’t have to pay a fee until after the benefit has been received. Therefore, your business won’t have to part with any money for using a R&D tax specialist until you’ve received your tax incentive credit payment or reduction. And if you don’t receive a benefit, then you won’t have to pay a fee.
This means that the process of making R&D claims won’t have a negative impact on your cash flow. At R&D Tax North West Ltd, we won’t charge a fee unless you benefit from our claim process, so you can maximise your cash flow to benefit your overall business.
- Increase the chances of a final approval
Unlike Accountants, who have a general knowledge of tax schemes and legalities, R&D Tax Relief Scheme Specialists have an extensive and in-depth understanding of the R&D tax credit scheme, including any changes that can occur. This means that R&D tax relief specialists are better qualified to prepare and submit accurate claims that meet the complex requirements of the scheme.
As R&D tax relief specialists, we have years of experience with successful claims, as well as extensive technical knowledge relating to a range of sectors, including manufacturing, renewables and energy. A specialist like ourselves not only understands the technical jargon, methodology and rationale of your R&D projects, but we also know how to simplify this for your R&D Tax Claim submission.
- Identify every qualifying expense for maximum benefits
Not all costs incurred through R&D work qualify for R&D tax relief. In fact, there are many factors that need to be considered to determine exactly which costs qualify. For example, hire or rental costs do not qualify, neither does expenditure on the production and distribution of goods.
A person inexperienced in preparing R&D claims may overlook a variety of costs that can be claimed. However, an R&D Tax Relief Specialist can identify the optimum value of eligible costs so that you receive the maximum relief available – this includes helping you claim correct percentages for sub-contracted work and expenses for collaborative R&D projects.
- Inspire further innovation for growth
Despite the fact that R&D work is critical for the success of many businesses, it is often avoided due to the risks and costs involved.
Venturing into the unknown with R&D work can be daunting. However, it can be more appealing when there is the support of a financial incentive, the R&D Tax Relief Scheme, to alleviate the financial burden of conducting R&D. It’s reassuring to know that even if R&D projects are not ultimately successful, eligible costs can still be claimed.
The R&D Tax Credit Scheme is a great way to inspire businesses to conduct R&D activities. As well as product innovation, R&D can help you to devise new strategies, approaches, capabilities and processes that may ultimately lead to lower running costs and the increased financial stability of the business.
So, is it worth exploring R&D Tax Credits and using an R&D tax specialist for your claim?
This form of tax relief can help you to improve cash flow, so that your company can continue to innovate and succeed in an increasingly competitive environment.
Want to know if a recent, or potential project, will qualify for R&D tax relief? Contact Nick, our R&D tax credit specialist or call 01827 338 118.