£5 Million Back to Innovative Businesses
A Dorset consultancy has helped innovative businesses benefit from HMRC’s Research & Development (R&D) tax credit scheme.
Bournemouth-based tax incentives consultancy, Business Cash Enabler, reports helping businesses to claim in excess of £5m in tax credits or cashback for costs incurred in innovation activities:
“This is an incredibly generous government funding scheme but is much misunderstood and there is evidence that many Dorset-based businesses are not claiming their entitlement. Many are eligible yet are not claiming at all, others have severely under-claimed. This may be a particularly important message to innovative businesses in any sector if they have struggled during the past 12 months of the pandemic. Claims can be made reaching back two accounting periods enabling a business to receive a welcome cash injection, often tens of thousands of pounds and sometimes into six figures. It’s different to a loan too, it doesn’t have to be paid back!
Some headlines for eligibility are:
• Do you design and make new products?
• Do you seek to improve processes, services, materials or devices?
• Do you make prototypes or perform testing?
• Do you develop software or IT solutions?
• Do you employ any staff with a technical or scientific background?
• Have you paid subcontractors to carry out bespoke innovation?
• Have you invested in failed / cancelled projects or developed products that were never launched?
Unfortunately wrong assumptions are often made, such as ‘we can’t claim because we don’t make any profit and we don’t pay corporation tax’. This is a costly myth, because loss-making companies can receive a cash credit each year that they incur costs for qualifying activities. Another common barrier to receiving full entitlement is ‘we are already claiming’, likely as a DIY submission to HMRC, yet a shortfall can be claimed for the previous 2 years.
Another wrong assumption may be that ‘we don’t do any R&D’. However, definitions of qualifying activity extend beyond obvious R&D and can even include internal IT or software projects where costs were incurred and may have included sizeable subcontractor costs. Conversely, some companies have claimed and received benefit from a DIY claim for work that isn’t actually eligible. What they do may be clever and skilful, but may not comply with legislation. In the event that HMRC review a claim in detail they may require the money to be paid back.
The core reason behind under-claiming is perhaps that it is not appreciated that claim entitlement is fundamentally about overcoming technical (and scientific) uncertainty, therefore a technologist-led approach will accurately identify what is in scope, more so than an accountancy-led approach. Business Cash Enabler works with a group of scientists, engineers and IT specialists who compile a compliant technical report. The accountancy aspect is the simple part of a claim, which can only follow when technical merits have been correctly assessed. Experience shows time and again that a claim report by a specialist claims provider will increase claim values significantly.”
For more information visit www.businesscashenabler.co.uk
To arrange a free eligibility assessment email [email protected] or call 07732 627085.