Common myths about R&D tax credits
Despite the best efforts of the UK government, it remains the case that many businesses engaged in research and development activities are failing to claim the R&D tax credits to which they’re entitled. Whether this is down to uncertainty over eligibility or simply a fear of navigating the complexities of the application procedure, it seems common for business leaders to be buying into a series of myths surrounding R&D tax credits.
At R&D Tax Solutions, we’re delighted to help dispel some of the most common myths regarding the credits, and help businesses of all sizes identify the opportunities that are available.
Myth 1: R&D credits are only for ‘men in white coats’
Arguably the most common myth we hear comes from business that don’t consider the nature of their work to be applicable for R&D purposes. This usually arises from the notion that, in order to be true research and development, it should take place in a laboratory and be conducted by cutting-edge scientists in white lab coats.
In reality, any company that engages in projects for advancement in their field could well be eligible. As such, HMRC R&D tax credit claims can be made from an array of industry sectors, with engineering, software development, construction and even architecture among those where businesses can make a successful R&D claim.
Myth 2: Subcontracted work cannot be claimed
If, like most modern companies, you subcontract to others to help meet your business objectives, you may well believe that any such subcontracted R&D work cannot form part of your tax claim. In fact, depending on the nature of the work and also exactly what has been contracted out, you may well find that you are eligible to make a claim. It pays to ensure accurate records are kept detailing the associated costs of subcontracted R&D work, while working with R&D tax experts will help you fully document such activity.
Myth 3: We can’t claim as we made a loss
Successful or not, all R&D projects – and the costs incurred – that have been undertaken by your company form part of your tax credit claim. So, regardless of whether your project meant your business generated profit, or if by the end of the financial year you were in a loss-making position, you have the chance to submit details of your activity to HMRC in order to claim the benefits.
It’s worth keeping in mind that, in order to fulfil the criteria for R&D tax credits, your business should be looking ‘to achieve an advance in overall knowledge or capability’, and that the final result of such activity is immaterial.
Myth 4: Making a claim will only lead to investigations
While incorrectly filed or unsubstantiated R&D tax claims may well prompt HMRC to review your activity, taking the necessary measures to ensure you accurately document all R&D projects and expenditure should make the processing of your claim straightforward.
Work alongside experienced R&D tax experts to ensure that all claims are correctly completed and, instead of worrying about a potential HMRC investigation, look forward to receiving the benefits your research activities deserve.
For more details on making a successful R&D claim, contact the team at R&D Tax Solutions in Manchester today. We’ll be happy to answer any questions you have and help support you throughout the process.
