We get a lot of questions about R&D Tax Credits. If you can’t find what you’re looking for in our FAQ, contact us and we would love to help.
Launched in 2000 for SME’s and in 2002 for larger companies, Research and Development (R&D) is a valuable tool for growing and improving your business. R&D involves researching your market and your customer needs and developing new and improved products and services to fit these needs.
HMRC defines an R&D project as ‘activities conducted to a method or plans in order to achieve an advance in science or technology’. These may be ‘part of a larger commercial project’. In whatever industry you operate, if the above applies, you may well have a valid claim. R&D can exist at ‘all’ levels, across ‘all’ sectors. It is often considered solely for labs and those in white coats which is simply not the case. Even ‘attempted’ advances to your process or product improvement, regardless of the outcome can include eligible spend. 13,985 SME’s claimed for the 1st time in 2018, however so many are still missing out.
That’s easy. Contact Tychon for a free consultation where we will gather some basic information, discuss your project(s) and discover if there is eligible spend. Don’t worry if you are not sure, that is why we are here, to help you understand and identify if you have a potential claim. If we don’t find anything, at least you have asked the question. If you do have eligible spend, Tychon will prepare your R&D Tax Credit report and get your money back.
Our goal is for this process to be simple, saving a huge amount of your valuable time by removing the need for a constant flow of data back and forth.
If our initial engagement call finds your R&D claim to be viable, we’ll arrange a session with one of our chartered accountants to go through our online solution. Having your accounts and an expert involved in your project available will help us complete the data collection quickly. Our tax expert will advise on the approximate eligible spend and whether or not it is worthwhile proceeding with your R&D claim.
If both sides are satisfied to progress with a valid claim, we will generate and download the report. This contains all the relevant information and calculations required to submit a claim to HMRC. Upon agreement of the best commercial arrangement to suit, the report is released to you upon agreement with our Terms and conditions.
This depends on whether you are claiming SME R&D Tax Credits or, for larger business, RDEC, and on your business’s profitability. An SME can expect to claim around 14-33% on any costs which qualify. For larger companies, expenditure credit applies so this will change and would require further consultation.
The claimant must be a limited company and subject to UK Corporation Tax. Sole traders, LLP’s and charities do not qualify for R&D tax credits.
Yes, the size of your business impacts the scheme to which you can apply. SME R&D is for companies with fewer than 500 employees and turnover of less than €100m/balance sheet total of less than €86m. RDEC (R&D Expenditure Credit): 500+ employees or Turnover of more than €100m AND balance sheet total of more than €86m. This can change based on group structure. For example, where Company A is owned by Company B, dependent on % owned, this may shift an SME claim into an RDEC by total employees or turnover.
If qualifying costs were incurred within the company’s last two financial years, then you can claim for these as R&D. This is because amendments to the CT600 can only be made for up to two years after the end of a company’s financial year.
To show that a project is eligible for R&D tax relief, you must demonstrate that it fulfils at least some of the following five criteria. Don’t worry, as this is where we can guide you and advise whether your project is eligible.
- The project aimed to make a technical advance.
- The technical advance was relative to the industry baseline.
- The advance related to an area of science and technology.
- It involved technological uncertainty.
- These technological uncertainties couldn’t have been easily worked out by a professional in the field.
Absolutely. The purpose of R&D Tax credits is to refund and reward ‘ongoing’ projects, even those spread over different tax years. Depending on the value of your claim, Tychon will advise you as to whether it is best to claim now or wait until the following financial year.
Ironically, ‘failure’ is viewed positively from an HMRC R&D perspective. Unsuccessful R&D expenditure is as valid as the investment resulting in success. Additional changes the business has had to make to accommodate any attempted advancements are also considered within the overall application.
R&D tax credits can be awarded in one of several ways: Cash back, a Corporation Tax rebate or saving, or as an expenditure which you may take forward against future profits.
All we will need is a copy of your accounts, plus any management accounts if possible. We also find it can be hugely beneficial to have the relevant competent professional who is involved within the R&D project present during the assessment. However this is not a ‘must have’.
We offer a unique and competitive pricing band model based on eligible spend. Our pricing structure is straight-forward, transparent and provides a fixed price based on your total eligible spend up to £200,000. Beyond that we offer a highly competitive flat rate at 2.75% of eligible spend. Tychon understand the SME sector, and want to support our clients by offering payment options to ensure you get the money back in as pain free a way as possible using the best solution available. See Pricing Page
The session with one of our chartered accountants can take approx. 1 hour. After this, your full report will be available to generate and send directly to you, so you can forward to HMRC along with your tax return. Once HMRC receive the submission, you should receive your R&D tax credits within 28 days. Currently, we are experiencing a return rate between 7-14 days.
There is always the possibility HMRC may require further information. However, statistics show that less than 1% of claims made are moved to enquiry. At Tychon, we value our service highly and apply integrity and genuine partnership with each of our clients to ensure a successful outcome. Tychon have a 100% success rate of returned credits and in the unlikely event, will support you should HMRC require any further information.