RDS: The Specialists in R&D Tax Credits
R&D tax credits can be claimed by any UK business that meets HMRC’s guidelines. Work that focuses on an advance in science, technology or process can qualify as long as there is challenge, technical uncertainty & innovation.
We appreciate that sometimes you can be so busy working ‘in’ your business rather than ‘on’ your business that you aren’t aware of potential benefits like R&D tax credits which aim to encourage businesses to think outside the box, innovate, invest time and money into the Research & Development of innovative products, service & systems & ultimately advance what is currently openly available in the marketplace.
R&D TAX CREDITS: IS YOUR BUSINESS ELIGIBLE?
Before starting an R&D claim application, it’s important to find out whether your business is eligible.
To be eligible for R&D tax incentives, there is a specific set of criteria laid out by the British government:
- Your business must be a limited company registered in the UK
- You must be subject to corporation tax
- Your company has to have carried out qualifying research and development activities in the science and technology field
Sectors
We have helped businesses across a range of sectors claim R&D tax credits for their innovative work. Ranging from individual ‘projects’ through to massive multi-year developments, we’ve seen it all – and helped claim the eligible benefits for businesses on it too!
GET IN TOUCH WITH OUR R&D TAX CREDIT SPECIALISTS
At R&D Specialists Ltd (RDS), we’re committed to our work, aiming to improve the stature of businesses across the UK with our services. We have a rigorous process that we adhere to when working with business owners to claim their R&D tax credits, only charging a fee if your claim is successful.
If you think you may have an eligible claim & want to talk to us then don’t hesitate, we love to throw around ideas & via a quick initial phone call we’ll give you our honest & experienced opinion.
THE BENEFITS OF USING A SPECIALIST R&D ADVISOR
With the constant changes in the UK R&D scheme, ranging from legislative changes, eligibility amends & alterations to the benefit financials, using a specialist R&D firm has never been more important.
Many accountants no longer want to handle R&D claims due to the quantity of work involved with a claim submission, and businesses who previously did their own claims in house now don’t have the ability or knowledge to submit claims ensuring they meet eligibility – and so we are here for you.
A dedicated focussed team
Our specialist R&D team purely work on R&D claims and so from over 1000 UK companies there is very little we haven't seen. We see ourselves as an extension to many businesses.
Up to date knowledge
As we've seen in the last 18 months, HMRC can change the R&D scheme, eligibility, and process at any time, and our team is always up-to-date with the latest legislation.
SIMPLE TRANSPARENT PROCESS
We know how busy you are running your business, so we have a simple process that only requires a couple of hours of your time in total, and then we’ll do all the rest of the work ready for submission alongside your tax return. Let us do the leg work for you.
Proactive info & support
Although when a business starts working with us it is usually because they have a claim to prepare, moving forward, many deal with us throughout the year to get answers to questions as they are carrying out their R&D.
Industry experience
The benefit of working with over 1000 businesses across many different sectors is that we have seen a huge amount of 'projects' and innovation, and so we have the ability to 'draw out' of our clients the required information in order to complete robust R&D claims.
Robust R&D claims
No-one wants HMRC to question their claim submission, but as we've seen over the last 18 months, HMRC can ask about part or all of a claim & we've proud to stand by claims we've submitted at our own time and expense to try & get our clients to a successful conclusion.
WHAT ARE R&D TAX CREDITS?
R&D tax credits are a government incentive, granted to British businesses that invest in innovative science and technology projects. R&D tax credits are essentially a reward for your investment – the money claimed can be useful for improving future research and development, as well as growing your company. Tax relief may also be granted from corporation tax, if the projects you’re funding are classed under the R&D umbrella.
To claim this form of tax relief, your investments must be awarded to projects that advance science and technology. This means that you cannot claim for schemes that are funded within the arts, humanities and social sciences categories.
Your R&D projects must also be linked to the type of business you run – according to the government, you need to explain how your scheme:
- Searched for an advance in the field
- Overcame scientific or technological uncertainty
- Could not be easily overcome by an expert in the field
NOT AS COMPLICATED AS YOU’D THINK
Whilst an R&D tax credit claim may sound complicated at first, we’re here to guide you through the process. Our professional in-house team will work as an extension of your business, using our knowledge of the financial industry to get the best results for your company. In most cases, if your claim is successful, you will receive your funds as either a bank payment or as a reduction on your corporation tax. Another thing to note is that if you’ve never attempted to claim tax credits before, you may be able to claim R&D tax relief for your last two accounting periods.
With no upfront fee until your tax credit claim is successful, we set ourselves apart from the competition, ensuring you’ll always be happy with our services.
A FOCUS ON EXCELLENCE FOR OUR CLIENTS & PARTNERS
As a business we have learnt over the years that the best way to add real value to our clients & partners is to become an extension to their business offering specific, detailed and transparent advice. Our personal approach to every client twinned with our desire to offer excellent customer service has meant that we have worked with many businesses year after year, and are now considered a part of their team and strategy.
Unlike many R&D companies, our end-to-end claim process is completed in-house, in the UK, by real people rather than via generic automated software. Every customer and partner is assigned a dedicated account manager (BDM) & Financial Analyst (FA), which means we are able to build a great ongoing relationship with over 1000 UK businesses.
This perfected approach means we can really drill down into R&D project details & ensure claim accuracy, and the result of this is a successful robust R&D claim that meets HMRC’s eligibility & is processed and ‘paid out’ in a timely manner.
Our process is excellent & proven…
Frequently asked questions
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What are R&D tax credits?
R&D tax credits is an incentive where UK limited companies can receive a reduction or rebate on their CT for funds spent on eligible R&D activities. This incentive was established by the government in 2000 and has continued to support businesses of all sizes and sectors to grow.
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Do I have to make a new product to claim?
No, you do not need to create a new product to qualify for R&D tax credits. For instance, you can make significant advancement or appreciable improvement to existing machinery, in a manner that promotes efficiencies within your sector.
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Can I claim for unsuccessful R&D projects?
Yes, you can claim for unsuccessful projects if you can demonstrate that an advancement was sought, and you attempted to overcome the ‘uncertainties’ you faced during your research and development endeavours.
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Which costs qualify for R&D tax credits
Knowing which projects actually qualify for R&D tax relief and what expenses can be claimed, are important areas of consideration, particularly because they have the power to maximise the value of a claim.
Here are things that you CAN claim for:
• Utilities (Gas, Electricity, Water).
• Salaries and Wages.
• Employer’s NI Contributions.
• Employer’s Pension Contributions.
• Materials and wastage consumed during the project.
• Prototypes created.
• Subcontractors’ invoices.
• Software Licenses. -
Which R&D scheme should I use for company’s R&D tax relief claim?
R&D tax credits are available to all companies regardless of sector or size. There are two incentives which cater to different sized businesses. The SME’s (SME tax Credit scheme) & Large companies (RDEC).
The scheme you will be eligible for is determined by 3 factors. For SME’s, your company would be eligible:
• If your company has less than 500 staff
• and less than 86 million euros in assets
• or less than 100 million euros in turnoverIf you exceed the above, then you must claim via the Research and Development Expenditure Credit (RDEC) scheme.
The SME and RDEC incentives operate in significantly different ways, so it is important that the correct process is selected during the filing of a claim.
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How do I make an R&D tax credit claim?
The first step will be to ensure that your projects and activities qualify for the incentive.
The second step will be to produce evidence in the form of project technical reports, pictorial evidence, and calculations to support your claim. This is an incredibly sensitive and fragile process, as mistakes could run the risk of HMRC opening an enquiry into the claim and asking for additional information.
Alternatively, you have the option of contacting specialists such as RDS who will not only produce all the documentation requirements. Rather, we will work with you through the entirety of the claim process to ensure that your company remains compliant with HMRC’s requirements.
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What happens after my R&D claim is filed with HMRC?
Once we have compiled all the necessary documentation and it has been reviewed by yourself, it is uploaded and submitted with your corporation tax return. Once HMRC receive this information, it is sent to a specialist incentives unit where it is treated accordingly.
Typically, reductions in Tax Liability are often processed immediately and will reflect within 24-48 hours. However, in circumstances of tax repayment or payable credits, it can take up to 4-8 weeks.
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How are R&D tax credits paid?
There are a number of options you can receive your benefit from HMRC. This is typically dictated by your companies’ tax position, as well as preferences.
Claims submitted in previous years: these usually tend to be a rebate (if the liability has already been paid).
Claims submitted in current years: The typical option is a reduction in corporation tax liability (if the company is profit making). In circumstances where the company may be loss making, they may elect to carry the losses back (to offset against previous outstanding tax liability) or carry the losses forward (to utilise against future tax liabilities).
Depending on the tax position, and the direction it anticipates for the future, a company may also elect to surrender their losses for a payable credit to aid with cash flow.
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Can charities or sole traders claim for R&D tax credits?
The R&D incentive is aimed at UK companies that pay corporation tax. Since charities, universities and sole traders do not pay corporation tax, they are unable to claim R&D Tax Credits.
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My project is not completed yet. Can I still claim?
Yes! The claim looks at the costs incurred within your financial year. Some projects can last several years therefore, you would submit a claim each year and detail the developments that fall within the relevant claim period.
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Can I claim for failed projects?
Yes. As long as you attempted to solve a scientific or technological uncertainty and incurred costs, you can claim.
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Do overseas projects qualify?
Yes. The incentive is for UK based limited companies but if part of your R&D is carried out overseas via sub-contractors or even part of a larger network of offices, you can still claim.
We would always advise speaking with experts such as RDS, in order to ensure that elements such as accounting structures, do indeed render your projects as qualifying.
In some scenarios you can use a combination of the above to maximise the tax relief calculated or increase the amount of cash you receive to help with cash flow.
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Can we claim for R&D we subcontracted to a 3rd party?
If you are hiring a 3rd party to assist with your project then you can generally claim for 65% of the payments made to unconnected parties.
If you are connected to the 3rd party then the rules become more complex, and we would advise seeking advice from a professional firm like ourselves.
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How do you charge for your R&D tax credit service?
We bill you on the benefit identified and operate purely on a ‘success’ percentage, (this means we only bill you if your claim is successful).
We do not charge day rates, nor do we have hidden fees; we simply create your R&D claim and supply your accountant with the claim details when it is ready for submission to HMRC.
Following the successful receipt of your benefit, we charge a Success Fee of 25% when your first and second claim has been approved and a flat rate of 20% for future years.
Our billing structure is developed with our clients in mind; by billing you only after you have received your benefit from HMRC we remove the risk of upfront costs from your business.
We also provide an amazing referral scheme, where we pay you a commission that you can utilise to offset against your bill.
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What is the claims process?
For many firms, the prospect of R&D can seem daunting and extremely complex at first, this is why BSE aim to make the process as simple and straightforward from the onset.
Step 1: A 10-minute conversation with the Business Development Team, to discuss eligibility.
Step 2: Signing of the NDA/ client agreement, dictating the terms and conditions of our service.
Step 3: Arranging and undertaking a Project Technical Report call with your dedicated financial analyst. This will entail evidencing your developmental endeavours and apportioning financial calculations to support your application with HMRC.
Step 4: Reviewing compiled information to ensure you are completely satisfied with the information collated prior to its submission to HMRC.
Step 5: BSE will complete the additional information via the HMRC portal and actively monitor the status of the application to ensure that any benefit is realised within the anticipated timeframe.
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How long will it take to receive an R&D tax credit repayment?
HMRC aim to process payable credit claims within 28 days of receiving them. However, processing time can be affected by aspects such as, time of the year. There is a general increase in demand for months like March and December.
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Can I claim patent costs?
As a patent is issued on the completion of R&D, it would not be considered an allowable cost in accordance with the remits set for the R&D tax Credit incentive. However, companies can utilise a separate incentive known as Patent Box which permits companies to apply a 10% Corporation Tax to profits associated with the patented invention.
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How important is record keeping when processing my R&D claim?
Generally, there is no additional requirement for record keeping specifically for the purposes of claiming R&D relief. However, it is important to give a summary of R&D projects undertaken and an explanation of how the project(s) qualify. This process is undertaken during your Project Technical Report call with your dedicated BSE financial analyst.
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Do I pay upfront costs?
No, we do not bill you until you receive your benefit from HMRC. The relationship we build with our clients is based on the principles of trust and transparency. Therefore, the benefit is paid directly to you before you pay us for the services rendered.
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What if RDS do not find eligible R&D to claim?
Our dedicated team of analyst ensure that each project is thoroughly vetted before proceeding to the next stage of claim processing. In an instance where a project is deemed ineligible, we typically undertake thorough investigation to help our clients identify if there is potential for future project eligibility.
We would never dismiss the fact that R&D can arise at any point due to factors such as market trends, legislative changes, an identified gap in the market etc. In fact, we have an open-door policy with our clients, wherein if there is no identified eligible project, they are free to contact us at any point for advise into their developmental endeavours.
In instances where there is no prospect of eligible R&D activity, we believe in upholding the long-lasting partnership we have with our clients and will recommend partnering with us on our referral program.
Every successful application will result in us sharing our fee with our clients as a referral partner.
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What is a HMRC enquiry?
An enquiry from HMRC usually occurs when HMRC have information they wish to clarify about the nature of a claim. Due to recent legislative changes, HMRC’s approach to R&D tax credits is likely to become stringent. It is therefore important, to have an experienced, competent, and trusted partner, like RDS to guide you through the claim process.
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What happens if I have an enquiry?
We act purely as a standalone R&D specialist, therefore in the unlikely event of a HMRC enquiry, we would manage the process in its entirety (as part of our service agreement with our clients).
