R&D Tax Claims: Insider Tips to Maximise Your Claim

Businesses making an R&D tax claim have the potential to receive transformative funding. However, it’s not always an easy process. The application can be complex and requires precision, and HMRC has recently cracked down on those R&D tax claims that contain ineligible projects, even by mistake. If you’re going to make an R&D tax claim, then it’s important to get the application right to maximise your claim – here are our tips on how to do it.

Make sure you’re Claiming under the Right Scheme.

The SME scheme is much more generous so it’s important to look at whether your business can make an R&D tax claim under this option, as opposed to the RDEC scheme. The main criteria for the SME scheme will be that the enterprise has:

  • Fewer than 500 employees
  • An annual turnover of less than €100 million
  • A balance sheet of less than €86 million.

Be Clear about what you can (and can’t) Claim For.

Obviously, to maximise the claim you’ll need to include as many of the project costs as possible. However, to avoid an investigation by HMRC you’ll need to ensure that you’re not wildly claiming ineligible items. So, get clear on what the qualifying costs are for an R&D tax claim – this will be your staff costs, the cost of external contractors, software, R&D consumables, clinical trial volunteers, cloud costs, data licenses etc.

Move around your Losses to Maximise your R&D Tax Claim.

You can do this with a mechanism called surrendering your losses. The key to this will be whether or not you expect the business to make a profit in future tax years – if not then it makes sense to surrender the loss now. It’s always worth seeking expert financial advice if you are unsure about this topic.

Is your Small Business classed as ‘Linked’?

This will affect any enterprises that appear to sit within the criteria for the more generous SME R&D tax claim scheme. Where one company is linked to another it means that the finances and employee workforce of both must be taken into account when looking at eligibility for the SME scheme. Factors that could indicate a linked company include:
• Can another company appoint or remove any of your management team?
• Are more than 50% of capital or voting rights in the hands of another company?

Claim for the right projects.

How you define a project will essentially depend on how deep into detail you go – and how many smaller parts you divide an activity into. Ideally, you’ll end up with 3-5 projects, 1-3 of them (at most) in a claim.

Use the CT600 acceleration.

CT600 is the green form that gets submitted annually providing an outline of your business’ tax position. To use the acceleration, submit the CT600 and tax return as normal but omit the R&D tax claim amount. Then submit an amended CT600 including the R&D tax claim amount. What this does is ensure that your claim goes straight to an HMRC R&D tax claim specialist so that it’s processed faster.

Accelerate your Business with SPRK Capital

This is a great starting point to maximise your R&D tax claim, but to make the most of your funding, SPRK Capital’s R&D tax credit loans are worth exploring. This will allow you to support your business with access to capital on an ad hoc, quarterly or annual basis. Speaking with a member of our team is the best way to maximise your tax claim and take your cash flow to the next level.

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