Research and Development (R&D) tax relief

How do I know if my company qualifies for R&D tax relief?

It’s relatively simple to qualify for R&D tax relief. Firstly, you must be a limited company within the UK, that is subject to corporation tax. You can be in any sector; they all qualify. It is largely about ensuring you have spent money on the projects which you are claiming for and the R&D activities carried out are qualified.

How do I know if my project counts as R&D?

HMRC are wide-ranging in what they state to be R&D, defining it as activities which aim to ‘resolve scientific or technological uncertainties.’ As long as the project seeks to innovate and advance, you are able to apply.

Is there a minimum value to qualify for an R&D tax claim?

There is no minimum, you can claim on any amount of expenditure. Since 1 April 2012, the minimum value requirement has been lifted, prior to which you would have needed to have spent a minimum of £10,000 of qualifying research and development costs.

Can SMEs claim?

As an SME you can claim, it is open to all companies of all sizes and sectors. However, as an SME, you can claim on the cost of subcontractors, but this the claim amount depends on the category of the subcontractor. Connected subcontractors have complex rules surrounding the claim based on the nature of their expenditure. For unconnected subcontractors, any of the activities they have undertaken which are qualifying R&D activities, are restricted to 65% for the claim.

Is there a time limit on when claims need to be made by?

R&D tax relief is a corporation tax relief, and the deadline for amending corporation tax is 24 months from the end of your accounting period. Which, in turn, means the deadline for R&D tax relief is 24 months after the end of your accounting period.

How long does it take to receive the payment for the R&D tax credit?

If you are an SME, your claim will typically be reviewed by the HMRC within 28 days. The length of time a claim takes to be processed does depend on the complexity and structure of your company. It is usually the size of a company (whether SME or large company) that will delay a claim.

Can you switch R&D advisers mid-claim?

It is possible to switch advisers; however, before doing so, it is best to look at the contract you have in place with your current providers. If you have no contractual lock-in in place or your contract has expired, then you are free to switch advisers.

To switch should be simple, you should be able to tell your previous adviser you no longer wish to use them and then choose your new adviser. It will then be for the two advisers to work together to ensure a seamless transition and continuation of services for you.

Can I re-use previous R&D claims to save time?

Because the HMRC want to ensure that you are considering your claims in detail each time, you are not able to re-use a previous claim. Although this is the case, because a project may span many years before resolving the uncertainty you aim to, it is possible to have multiple individual claims against one project.