Making R&D Tax Credits Accessible to companies across the UK

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1000+ companies use QLC to claim for R&D tax credits every year

In 2000 HMRC introduced a scheme to financially incentivise UK business to invest in research and development. (France, Germany, USA and Canada have similar schemes). Fast forward 20 years, and in 2021 alone HMRC paid £4.4 bn in relief to 76,225 Small to Medium Size businesses across the UK.

It’s very simple, if your company turnsover less then £86 million and has under 500 employees you are free to claim under the SME scheme. Each year roughly 18,000 companies just like yours claim for R&D for the first time. 

HMRC have made the criteria purposefully broad to encourage all types of companies to claim. HMRC’s guidelines can be found here, but we’ve also quoted some sections below:

“A project which seeks to, for example, 

(c) make an appreciable improvement to an existing process, material, device, product, or service through scientific or technological changes; or

will therefore be R&D

Even if the advance in science or technology sought by a project is not achieved or not fully realised, R&D still takes place.

If a particular advance in science or technology has already been made or attempted but details are not readily available (for example, if it is a trade secret), work to achieve such an advance can still be an advance in science or technology.”

Once you have established that a project qualifies for R&D tax relief, the following attributable costs can and should be included in your claim. 

  • PAYE staff
  • Subcontracted labour
  • Consumables 
  • Light and Heat 

Once these values are combined typically 14.5% to 19% of them can be included. The average SME R&D Claim in 2021 was £53,331.

The mechanism that HMRC uses to pay-out R&D tax credits is linked to your corporate tax return. (Don’t worry if you haven’t paid corporation tax, you can still claim a cash rebate). 

A company can make an R&D claim for the past two years’ worth of accounts (providing you have a qualifying project). Once a claim is submitted, HMRC either pay through a tax-free rebate, or you can offset outstanding tax, it’s up to you. 

HMRC have created the R&D scheme, however HMRC also have the right to enquire into tax credit claims. Oftentimes they simply would like further information about the project. If HMRC is certain that the claim does not qualify for R&D tax relief they can disallow it. In very extreme circumstances they can impose penalties, these can be a small percentage of the overall claim.

HMRC claim that it should take around 30 days, but this timeframe can vary wildly, often without explanation.

Once you have established that a project qualifies for R&D tax relief, the following attributable costs can and should be included in your claim. 

  • PAYE staff
  • Subcontracted labour
  • Consumables 
  • Light and Heat 

Once these values are combined typically 14.5% to 19% of them can be included. The average SME R&D Claim in 2021 was £53,331.

The mechanism that HMRC uses to pay-out R&D tax credits is linked to your corporate tax return. (Don’t worry if you haven’t paid corporation tax, you can still claim a cash rebate). 

A company can make an R&D claim for the past two years’ worth of accounts (providing you have a qualifying project). Once a claim is submitted, HMRC either pay through a tax-free rebate, or you can offset outstanding tax, it’s up to you. 

HMRC have created the R&D scheme, however HMRC also have the right to enquire into tax credit claims. Oftentimes they simply would like further information about the project. If HMRC is certain that the claim does not qualify for R&D tax relief they can disallow it. In very extreme circumstances they can impose penalties, these can be a small percetnage of the overall claim.

HMRC claim that it should take around 30 days, but this timeframe can vary wildly, often without explanation.

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