£260k Cashback for Software Business
At a time when Cash is King, a cash injection of this magnitude can be a matter of survival for a business. A frequently misunderstood government funding mechanism is available for businesses that have been innovative, potentially in any industry. One sector that often falls short of maximised claim benefit is the Digital sector. Rob Sowden, innovation tax incentives specialist at Business Cash Enabler reports a case study where a business benefited greatly:
“Just two years after I met the managing director of this business for the first time, they have benefited from £260k cashback under the HMRC Research & Development (R&D) tax credits scheme. This was an incredible cash boost for the business that develops secure web-based apps running on mobile devices. Many businesses and their advisors haven’t associated the R&D tax credits scheme with software development, however, innovation including writing APIs, algorithms, coding, Big Data analytics and app development, can all potentially meet the scheme criteria. Apart from costs incurred via payroll, this business also incurs costs from offshore developers. They still qualified for a rebate of a proportion of these costs because the costs were incurred by the UK registered entity. On the cautionary side, there is a risk that if a business tries to self-claim or via their accountant, without a specialist advisor, they may claim for work that is ineligible, such as out-of-the-box solutions or well known development techniques. There is the potential that HMRC could subsequently claw back any benefit paid.
“A trading company that carries out any form of unique innovation may qualify for a year-on-year cashback from HMRC under this very generous scheme. A company can claim back two accounting periods, or must have at least their first set of trading accounts, if it is an eligible startup. A business does not have to be profitable to get this tax credit or cashback, in fact a loss-making company may obtain an enhanced cashback, up to 33% of qualifying costs incurred can be rebated. Some businesses have claimed and received small amounts, maybe £10k or £15k, which may be much less than they are entitled to. What catches many businesses out is that they believe this claim opportunity is an accountancy work-stream, whereas it is really about technology. The claims management service I introduced this business to required a specialist software analyst to identify all of the qualifying activities permitted within the government’s scheme rules.
HMRC have remained operational throughout the pandemic to process claims, usually paid out around 45 days from a claim being filed.”
Business Cash Enabler provides a free service to businesses to check eligibility for innovation tax incentives. All stages of a claim can be managed remotely by phone, videoconference and email.
For more information visit www.businesscashenabler.co.uk
To arrange a free eligibility check email [email protected] or call 07732 627085