Innovating within your sector could save your business thousands in tax

Shaun Bartle from Finch & Associates explains how to claim valuable R&D Tax Credits.

Tax. That taboo word that plagues business owners. However, there is a very generous tax relief available to UK companies who advance scientific or technological knowledge within their sectors, which could save your business tens or even hundreds of thousands of pounds.

Some of the most common replies we hear when explaining the benefits of the Research & Development Tax Credit Scheme to clients are; “it sounds too good to be true” or “I don’t think we will qualify for the scheme”. Whilst it is true that the scheme does, on the face of it, sound too good to be true, we can assure you that is not the case.

The Government scheme rewards UK companies that push the boundaries of innovation and fuel growth in the UK economy. If your business is seeking to make advances in science or technology, then it could be eligible for R&D tax credits.

Making a successful claim could provide a valuable cash injection into the business and reduce your corporation tax bill. A loss-making company which qualifies for the SME scheme can potentially recoup up to 33p in every £1 spent on qualifying R&D activity, whilst a profit-making company can potentially reclaim up to 26p in every £1 spent.

Do you qualify?

As long as the business is a UK limited company and fulfils the two key requirements for making an R&D claim, then the sky is the limit regarding how many companies may be eligible. The two key requirements are:

• The company is seeking an advance in science or technology; and
• In seeking this advance, the company is faced with scientific or technological uncertainty.

But that doesn’t mean it has to involve scientists in white coats and lab rats. It could be ordinary businesses that are innovating within their sector. And the range of activities that qualify for R&D is broader than you may think. It could be creating a new process or advancing an existing system to create a more efficient result.

Successful claims for our clients

The following examples include industries which don’t necessarily scream R&D, due to their nature. However, we were able to identify the qualifying R&D activity undertaken by businesses in the sectors below and make these successful claims on their behalf:

• Marine facilities: survey & geotechnical services industry – tax benefit of £2.3 million-plus
• Rail & transport industry - £80,000
• Special effects industry - £87,000
• Recycling industry - £100,000
• Waste Management Industry - £35,000
• Entertainment industry - £12,000

These are just a few of the wide range of sectors where we have made successful claims for R&D activity. At Finch & Associates, we have completed many claims in more obvious R&D sectors, such as software development, which have helped to transform the businesses concerned and fuel further innovation.

Why Finch & Associates?

R&D tax credits are an extremely niche area of corporation tax and many accountancy and tax firms don’t offer advice in this area. This is largely due to the complexity of the relief, in which the legislation is very specific.

This is partly why there are not as many companies claiming the relief as there should be. It is therefore essential that leaders within their respective sectors seek specialist assistance to ensure they are not missing out on this generous scheme.

At Finch & Associates we don’t make bold sales claims about being the biggest and best, but our size and wide experience means we can offer a more personal and competitive service. We simply analyse what our clients do and whether they qualify for the relief. Our in-house experts will assist you every step of the way, making the process as pain-free and easy as possible.

And unlike many providers, we can assist our clients in related matters such as a remuneration analysis for key staff including directors, to ensure that they are maximising their R&D claims for the company whilst not compromising their personal tax situation.

What’s more, our contingency fee of 15% of the total tax saving is significantly lower than our competitors and we don’t tie our clients in. We believe loyalty is a two-way street, so you won’t have to sign a three-year contract with us.

Next steps

If you are pushing the boundaries within your industry and believe you could make an R&D claim, or if you are unsure whether you would qualify, please get in touch as soon as possible.

It’s important that you act sooner rather than later, as claims can only be made within the 24 months after your year-end.

Remember, a successful claim could help transform your business, freeing-up cash quickly to enable you to continue to innovate and grow.

For more information please email Shaun Bartle, Tax Advisory Manager at Finch & Associates - [email protected] – or phone him on 01275 867 350 or 07494 170 2020.  Alternatively visit our main website www.finchassociates.co.uk and our R&D website: www.rdtaxcreditspecialists.co.uk