How would your business spend an unexpected cash injection?
Think about what you could do with thousands of pounds to spend on your business. Would you make a capital purchase? Invest in training or hire new staff? Pay suppliers or give yourself and staff a bonus?
This is the superb situation you could be facing if you are a business that invests time and resource in Research and Development, commonly known as R&D. As R&D drives productivity and growth in the economy and is vital for the success of UK companies competing nationally and on the global stage, the Government has created a tax incentive scheme by which businesses can claim corporation tax credits or refunds based on the amount that they invest in R&D projects. This scheme, known as R&D Tax Credits, can be translated into corporation tax refunds from HMRC (going back two financial years), and, going-forward, a deduction from your next corporation tax bill.
Why is the Government actively encouraging you to apply for R&D Tax Credits?
To answer this, using the Government’s own words from a recent 2019 R&D paper, which states:
"Evidence suggests that the benefits of R&D to society are 3-4 times higher than the private benefits realised by an individual company. There is a strong case for supporting R&D though the tax system to incentivise greater investment by companies to realise these wider societal benefits.”
The Government is actively promoting the fact that you can lower your corporation tax bill and you have nothing to lose by investigating your company’s eligibility. If you are eligible, it would be exciting for your business to benefit from R&D tax credits and invest in your future growth! The criteria is wider than you may think and many businesses could potentially be investing in R&D without realising it.
What constitutes eligible R&D?
If you are a business or company that:
- is involved in challenging or complex technical or scientific projects
- invests money into innovation by developing new products, services or processes, or in enhancing existing ones
- carries out research, testing, trials and assessment to take a product or service to market
- is involved in reducing the carbon footprint with your products or projects
....and, in doing so, have had to overcome technical or scientific uncertainties or challenges along the way, then you are almost certainly engaging in R&D activity. A project does not always need to have been successful to qualify.
How Do Research and Development Tax Credits Claims Work?
Completed by a qualified Accountant, your company’s individual tax credit calculation is based on your qualifying projects and spend. Salaries, NI, Pension contributions, sub-contractors, energy consumption and related purchase costs are identified and enhanced through a stated rate and a calculation is made. This produces what is known as ‘your enhanced expenditure’. A further calculation is made of your enhanced expenditure at a rate based on whether you are a profit or loss-making (due to R&D investment) business. This results in a monetry value for a corporation tax refund or credit.
How Coaching Dynamics can help your business benefit from R&D Tax Credits
Firstly, Tina Dulieu of Coaching Dynamics, will use her business expertise and extensive experience to help you identify where R&D may be taking place in your company – many Directors do not realise that their company regularly engages in R&D activity. Once the R&D projects are identified and documented, Tina works in partnership with fully qualified, specialist Accountants who create and submit the R&D tax credit claim to HMRC on the company’s behalf.
Receiving R&D Tax credits or refunds really could make your growth plans a reality by reinvesting the funds, often tens of thousands of pounds, back into your business. This cash injection is an exciting step forward for many companies.
“Tina helped me build a successful claim that delivered thousands of pounds back into my business. She discovered many R&D activities that I simply did not realise were eligible including my own time spent on developing a new product. Thanks to Tina, I now have the money to invest in growing my business further.” MD of a Manufacturing Company
Tina explains, “My role is to identify and document qualifiable R&D projects within each client’s business. Through many years of working with all kinds of businesses and industries, I am extremely well-placed to recognise eligible R&D activities, often when clients are not aware themselves, expertly creating the necessary documentation and evidence to validate claims as required by HMRC."
Here are just some of the industries where Coaching Dynamics has achieved successful R&D Tax Credit claims: Architectural, Batteries, Construction & related industries, Digital, HVAC, Industrial, Lighting, Manufacturing, Pharmaceutical, Software, Transport… and many others.
Why wouldn’t you make a claim?
The Government are actively encouraging companies to engage in innovation and take advantage of R&D claim tax credits for reinvestment. Every company that is proactively pursuing growth engages in innovation of some kind. There is every chance that your company is engaging in R&D too!
Contact Tina Dulieu at Coaching Dynamics today to discover how your business can benefit from R&D Tax Credits.
Further information on R&D tax credits can be found on the Government website.