That sounds great, doesn't it? It almost sounds like free money and let's face it, who doesn't like free money. The problem is that claiming this R&D tax relief isn't nearly as simple in practice as it sounds on paper. There is a multitude of steps to follow, many requirements to comply with, and several challenges you’ll face along the way.
Fortunately, you can make the process a bit easier by choosing the right R&D tax advisor. When you do so, you’ll receive the best R&D tax advice in London and you’ll know exactly what expenses you will be able to claim, when you'll be able to claim them, and how much you'll be able to claim.
But where do you start your search for the right R&D tax advisor in London? What services do they offer? In this blog, we’ll look at these questions in more detail.
R&D tax advice in London and beyond. The basics:
Before looking at these questions, though, let's first recap what R&D tax credits are, what makes you eligible, and what you can claim.
What work qualifies?
The first step in determining your eligibility for R&D tax relief is looking at the specific project or the work you do. Basically, the project or work must be done to make advances in science or technology. As such, when claiming R&D tax relief, you’ll need to explain how the project:
- Looked for advances in science and technology
- Had to overcome uncertainty
- Tried to overcome this uncertainty
- Could not easily be worked out by a professional in the field
And remember, your project may research or develop a new process, product, or service or improve an existing one to bring innovation to a specific industry.
What costs can you claim?
When you've crossed the hurdle of eligibility, the next question is: What costs can you claim for R&D tax relief? The simple answer is that you can claim tax relief for costs that have been expensed through your profit and loss account. In some cases, you can also claim for capitalised expenditure, provided that the assets that you've purchased have been classified as intangible assets.
Considering the above, you'll be able to claim for costs like:
- Staff costs
- Agency or externally provided workers
- The costs of subcontractors and freelancers
- Software licensing fees
- Consumable costs, including materials and equipment used or transformed during the research and development process
- Payments to the subjects that participated in clinical trials
How much is R&D tax relief?
If your company is a small or medium enterprise that generates a profit, you'll be able to claim about 24.7% of your R&D costs as tax relief. Also, if your company is a small or medium enterprise that operates at a loss, you can expect to receive 33% of your R&D costs back. As mentioned earlier, you can use this relief as a rebate on your HMRC tax bill or get it paid out in cash.
Here, it's also important to remember that your R&D tax credit is not a taxable income. As such, its accounting treatment is relatively straightforward, and you’ll show it in your income statement either as a corporate tax reduction or a credit.
How far back can I claim R&D tax relief?
You can claim for R&D tax relief for the past two accounting years and you'll be able to make your claim in your company's tax return or an amendment of it.
Can’t I do it myself?
Now that we’ve recapped what R&D tax credits are and what you should look at to determine whether you're eligible and how much you'll be able to claim, the obvious question is: Can't you do it yourself? This simple answer is that you can, but if you don't have any knowledge of R&D tax credits, their eligibility requirements, and other criteria, you'll struggle to claim successfully.
Now, the immediate question, based on the above is: But can't I just use an accountant? And here, the answer is also simple. Yes, you can but that's not to say that you'll get the best advice and the best outcome on your claims.
Think of it like this. Let's say that you have a leak in your roof and you want to get it fixed. Whom would you call? Obviously, you’ll call a roofing contractor. Why? It's simple, roofing contractors are the experts in everything related to roofing. This means they'll be the right contractor to fix your roof.
Simply put, when you need something done right, you’ll go to the experts who know how to do it. So, if you go to the experts for everything else, why don't you do that for your R&D tax credits?
That's where the right R&D tax advisor comes in. They are the experts in their field and they can assist you with all your R&D tax claims. Another reason why you should consider using an R&D tax advisor is that R&D tax relief is a complex and technical field with requirements that change constantly.
So, when using an R&D tax advisor, they’ll be able to tell you exactly what you can claim, how much you can claim, and when you should claim. This is especially important when you consider that, if you underclaim, you'll lose out on valuable tax relief. In contrast, if you overclaim, you could expose yourself to an HMRC enquiry. Either way, an R&D tax relief specialist can help you eliminate these challenges.
What should you consider when choosing the right R&D tax advisor?
When looking for the right R&D tax advisor, it might be worth your while to consider the following aspects to judge whether the advisor is the right R&D tax advisor for your needs and requirements:
The other clients they’ve assisted.
By looking at the previous clients the tax advisor has assisted, you’ll get a good idea of how many clients they’ve helped in your industry. And when they've helped clients in your industry, they’ll know the ins and outs of claiming R&D tax relief for the type of work that you do.
How much experience they have in R&D tax affairs.
We all know that, generally, experience isn't everything and that everyone has to start somewhere. However, when it comes to R&D tax credits, experience is vital. Extensive experience in a highly complex and technical field, ensure that the tax advisor will be able to advise you properly in respect of what and how much you can claim.
Whether they understand the technical aspects relating to R&D tax credits.
To a certain extent tying in with experience, an R&D tax advisor must understand all the technical and complex aspects related to R&D tax credits. If they do, you’ll know that they will be able to claim successfully from HMRC on your behalf.
How many enquiries they get on the claims they submit.
Apart from their experience and their ability to manage and deal with R&D tax claims, you should also inquire how many enquiries they get on the claims they submit. This is important as it shows whether they understand what they can claim on your behalf. So, in other words, if they get many enquiries, it means that they often claim for expenses they're not entitled to.
Their terms of engagement.
Finally, you should look at their terms of engagement. As such, you should find out how much they'll charge you to claim R&D tax credits on your behalf.
Why Accountancy Cloud?
Hopefully, we’ve illustrated why it’s vital that you use an R&D Tax Advisor to get the best R&D tax advice in London. If you do, you’ll have peace of mind knowing that the tax advisor will claim everything they’re entitled to on your behalf. In turn, this ensures that you save substantial amounts on your tax bill.
And this is where Accountancy Cloud comes in. We’re expert R&D tax advisors that give the best R&D tax advice in London. We’ve helped CEOs and founders gain access to cash or reduce their tax bills for their businesses by combining our high-tech software with R&D experts. With over £30 million in claims processed and a world-class technical team, we’ve got the expertise you need.
To learn more about Accountancy Cloud and how we can help you, get in touch with us to discuss your unique needs and requirements.
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