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How to Successfully Claim R&D Tax Relief

With the recent budget, the UK government has committed to increasing its Research & Development Expenditure Credit from 12% to 13%, and to keep steady the rates of the SME R&D Tax Relief Scheme, increasing overall spending on government R&D Tax Credits, within the UK, up to £22 billion for the tax year ending 2021.
The UK keeps investing in innovation...

This means an increase of 15% in R&D governmental assistance, for both large companies and SMEs, from the tax year ending 2020, to the tax year ending 2021, leading R&D government expenditure to be at 2.4% of GDP.

With this in mind, if you haven’t already, perhaps now is now the time to seek to avail of the UK’s advantageous R&D tax relief scheme. We take a look at how to claim R&D tax relief quickly and successfully.

Having secured our clients over £11 million pounds of R&D tax relief/rebate over the past 24 months, in a wide variety of disparate industry sectors, we, at The Accountancy Cloud (TAC), know a thing or two about preparing successful R&D tax relief claims.

In saying this, we can also propose how you, in collaboration with a specialist tax advisor/accountancy firm, like ourselves, can turn your claim around as quickly as possible, to guarantee a timely acquisition of the tax rebate/relief that you are due. A few simple steps that we propose to claim your R&D tax relief are as follows:

1) Be sure to liaise with an R&D tax specialist

As generous as HMRC’s innovation incentives are, any submission to them must adhere to their niche tax legislation. As such, we advise that you consult with an R&D tax advisor/advisory firm to collaborate with during the preparation and submission of a claim. They will also be able to assist you with maximising such a claim, in line with HMRC’s guidelines, and to liaise with HMRC on your behalf, utilising their already existing professional relationships within same to clear up any queries that may arise.

2) Ensure that you collaborate with a speedy and diligent accountancy service

As a retrospective R&D tax relief claim is made as an emendation to your CT600 (corporation tax return) and this is submitted to HMRC, along with your financial period accounts, sent to Companies House, we, at TAC, find that the majority of delays with respect to the submission of R&D tax relief claims are as a result of accounts being delayed in preparation. This can be for a number of reasons but some of the most common are:

  • Bookkeeping being done incorrectly
  • Revenue being recognised in an improper way
  • Cap tables not being up to date after funding rounds, and
  • Intercompany/director’s loans not being updated

Choosing an accounting partner is one of the most important decisions that a company faces, and can, in this instance, mean the difference between acquiring the funding necessary to push the company forward, or even staying afloat in an adequately efficacious manner.

3) Begin the work before your year-end date

In line with 2) above, one can begin work on the R&D tax relief claim prior to their financial year-end. This can include the drafting of notes around project work undertaken during the period in question, leading to the drafting of the technical justification document; clarification of which costs can qualify for R&D tax relief; and ensuring that your account ledgers are streamlined, for preparation of the financial calculation.

Don’t hesitate to contact asima@theaccountancycloud.com for an exploratory discussion.

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