Common pitfalls businesses make when undergoing an R&D Tax claim
There’s nothing simple about making an R&D tax claim. In fact, such are the complexities around identifying qualifying activities, preparing the correct documentation, and submitting the details appropriately, it’s perhaps unsurprising that a number of mistakes are possible. As such, it pays to understand the risks associated with making a claim and the most common pitfalls to be avoided.
At R&D Tax Solutions in Manchester, we aim to help all clients avoid the mistakes that so often affect their submission for R&D tax credits, so take a look at the most common mistakes to avoid when making a claim and ensure your business is able to take advantage of the benefits you deserve.
First and foremost, it pays to know whether you meet the necessary criteria in order to make a claim. All too often, companies fail to realise that they have the opportunity to claim for R&D tax credits and thus never make a claim. In order to be applicable, your business should be engaged in spending money on developing new products, processes or services – or enhancing existing ones. The first mistake business owners often make is being unaware that they are eligible for such benefits.
As with anything tax and HMRC related, it pays to maintain records that are comprehensive and dated accordingly. Being meticulous in your record keeping – and being able to accurately demonstrate precisely how much resource has been invested in research and development – and ensuring such information is easily accessible may well prove invaluable to the success of a given claim.
Not claiming all qualifying costs
The value of the R&D tax credits claim you make is dependent on the qualifying costs you include. It is easy for businesses to overlook some of those costs from which they might be able to achieve relief, so being fully aware of those costs associated with R&D tax is vital. Of course, the most obvious expenses are those related to staffing and material costs. But did you know that you can also claim for such costs as electricity, pension contributions, and more?
Not claiming for a loss
You might think that claiming for R&D tax credits applies only to those businesses making a profit. If so, you’re among those making one of the most common mistakes in making a claim. Companies that are making a loss have the opportunity to reclaim associated costs regardless of whether the R&D work was completed successfully or not. The scheme has been set up to reward those companies that ‘seek to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty’, so even if you’ve made a loss, your investment should be rewarded.
Not consulting experts
Each of the mistakes identified demonstrates just how easy it can be to overlook a key part of your R&D tax credit claim. While they have been detailed in isolation, they could all be avoided simply by ensuring you don’t fall foul of the major mistake that is not consulting experts. R&D tax experts understand the complexities of making a claim, and have the ability to support businesses in identifying and potential successes, as well as supporting them through the full process.
To find out more about how to avoid missing out on the R&D tax credits your business deserves, contact the team at R&D Tax Solutions today. Our experienced and knowledgeable team will be able to support you throughout your application for tax credits and ensure you make a claim that meets the strict guidelines issued by HMRC. Call us today on 0161 298 1010 to learn more.