Common misconceptions about claiming R&D Tax Credits

R&D Tax Credits can be incredibly valuable and are often a game-changer, especially for high-growth SMEs challenged with cash flow. Those businesses could be eligible for tax credits to the value of 230% of R&D spending so it’s a process that is well worth investigating. However, many businesses simply don’t get involved with R&D Tax Credits – these misconceptions are often the reason why many companies miss out.

• There is no R&D work to claim for – In fact, R&D Tax Credits aren’t just for robotics projects or cutting-edge tech, it’s designed to support any company that is exploring new ways of doing things, even in a mature sector. So, your business might be more eligible than you think.

• If your business is loss-making, it won’t be eligible – This is simply not the case. Start-ups and pre-revenue businesses are often loss-making and this is something that the government accepts, which is why it’s possible for a loss-making business to start claiming R&D Tax Credits too.

• If the business has received a grant, then it won’t be eligible – This will depend on the type of grant that your business has received. One form of state aid is allowed per project so if you’ve received a grant then you won’t be eligible for claiming R&D Tax Credits for that project. But if the grant received doesn’t count as state aid, then this won’t affect your eligibility.

• The R&D work that the business does is for other organisations – You can still claim R&D Tax Credits where you’re carrying out development work for other companies. The key criteria here are that you’re carrying out the work at your own risk and the outcome is surrounded by significant uncertainty. If the other business isn’t reimbursing your costs, then you can use R&D Tax Credits.

• Making the claim is a complex process that there is just no time for – What many organisations don’t seem to realise is the cost-benefit of making a successful R&D Tax Credits claim. If you’re claiming under the SME scheme then you could be eligible for a tax credit of 230% of the spending you’ve made on development – that could potentially wipe out an entire tax year’s liability or result in a payable credit for loss-making companies.

• R&D Tax Credits are only designed for big and well-established companies – In fact, it’s the opposite, the scheme is much more generous to smaller businesses and start-ups.

• It takes a long time to access the cash – It can do if you’re waiting until the end of the tax year but there are other options to speed this up, such as R&D Advance Funding. R&D Advance Funding can enable you to access financing as you incur your development costs throughout the year.

• You can only use the scheme for products – Yes, the highest volume of claims is for products but the scheme is also available for services and intangible research. And there is no requirement for products or services to be profitable either – you can make a claim whether they are profitable or not.

Don’t let these common misconceptions prevent your business from accessing the benefits of R&D Tax Credits.

The key is working with a reputable R&D Tax Claim Advisor focused on the quality of the submission, not just the price being charged for that submission. HMRC is rightly looking closely at R&D Tax Claims, the costs of non-compliance are high. We’re passionate about supporting businesses that are brave and bold in staying ahead of the curve and are creating economic growth and opportunities for our country. Apply Today with SPRK Capital to get advance funding on your R&D Tax Claim and more.