Date posted: 16th Oct 2018
In our view, many North East based businesses are missing out on tax relief for work undertaken on research and development (R&D).
Before we lose you at this point and you start thinking about scientific laboratories working on the latest wonder drug, the scope of the relief is much wider than you may think.
HMRC have released some up to date statistics which shows that the main claims come from companies operating in manufacturing, IT and scientific fields, but claims are also made by businesses operating in retail, construction, agriculture, transport and many more.
Many businesses aren’t aware of the relief or just dismiss this out of hand on the basis that they believe they “don’t qualify” or “my accountant would have told me.” Whilst claims are on the rise, North East claims in particular are a lot lower than the rest of the country, which is startling when you consider the manufacturing that is undertaken in the North East. In our view, this is due to either a lack of awareness or perhaps a touch of modesty by business owners in not believing that what you have done is something that could be seen as a scientific or technological advance.
It is important to point out that R&D is a corporate tax relief – you must operate via a limited company to claim the relief – however, this doesn’t stop you starting to operate your business (or perhaps just the R&D activities) via a limited company which will enable you to claim the relief in the future.
Backdated claims can be made for companies that didn’t realise that they could claim or weren’t aware of the relief but any claim must be for an accounting period ending in the last two years. Thus if you have a 31 October year end, you can still make a claim for the relief in the year to 31 October 2016 as long as this reaches HMRC by 31 October 2018. If you have a December year end, then a claim for the year to 31 December 2016 needs to be with HMRC by 31 December 2018 and so on.
We have significant experience in discussing R&D, calculating the relief, preparing reports for submission to HMRC and liaising with HMRC in relation to any queries they have.
Get in touch if you want to discuss this further.