How SMEs can Maximise Their R&D Tax Credits Claims
The devil is in the detail
Imagine how great it would feel if your company suddenly had, say, an extra 20,000 to play with. It could be invested in growth or new projects, pay for new staff or finally rid you of debt. But what happens if you later realise that actually, with a bit more planning and professional guidance, that €20,000 could in fact have been €100,000… or €150,000? You’d probably feel pretty annoyed.
At Myriad Associates (developers of the Tax Cloud portal) this is unfortunately something we see all too often. It can easily happen if you go it alone, or take basic advance from your (well meaning) accountant - when what you actually need are the services of an R&D tax consultancy such as ourselves.
In the midst of making that all important R&D Tax Credits claim, it’s so easy to forget to include some of the eligible costs. Many claimants also miss off some types of expenditure simply because they didn’t realise it was eligible in the first place. Others have structured their company in such a way that doesn’t provide the best return, or they haven’t kept the right R&D records as evidence.
Don't let this be you!
In order to maximise your R&D claim, get in touch with our R&D tax specialists. Our team of accountants and tax advisors will go through your claim in painstaking detail, so no money is left on the table.
Across almost two decades in business, there’s not much we haven’t seen when it comes to R&D tax claims. Many times, the Myriad Associates experts have doubled or even tripled the claim value for businesses who have traditionally done them in house. And yes, many have ended up kicking themselves!
Here we've put together some tips to help you maximise your R&D Tax Credits claim for your small business.
1. Make record keeping a priority
This is especially true if you're likely to claim again in future.
Keep a list of the relevant R&D projects your business undertakes in a year. Do this even if you suspect they’re not eligible, or if it’s just a very small R&D project. It makes the claim more authentic, and easier for anyone outside your business to understand what occurred and when.
For projects that you know are definitely R&D, make sure you document at the outset what the scientific or technological uncertainty is that you’re looking to resolve. The key with R&D Tax Credits is in demonstrating what progress the project looked to make, rather than in the end product itself. The outcome of the project must have been uncertain at the beginning.
Lastly, don’t forget to keep a record of every single piece of expenditure related to your project. These could be things like expenses, materials and consumables used up in the course of your R&D activities. Money spent on building prototypes and testing them should also be included, as this is something many companies also forget about.
Top tip: A good way of doing this could be to raise an internal purchase order for each cost (if you can).
2. Include travel expenses
These can really add up! However, this is not as straight forward as it might seem - let us explain.
Supposing one of your employees takes a train from London to Manchester so they can attend a meeting to do with your R&D project. If the employer pays for the train ticket themselves, and then puts an expense claim in for a reimbursement from the company, then this would be fine to include in a claim for R&D Tax Credits. However, if the business pays for the train ticket directly, i.e it’s then not a reimbursed expense, then it can’t be included in a claim. It’s odd, but that’s the rule. So keep this in mind if an employee needs to travel.
3. Don’t forget electricity, water and gas
We’ve also found that many small companies particularly don’t know that they can include certain consumables in their R&D Tax Credits claim. These can be costs relating water, gas or electricity for example, but the trick is in working out what proportion was used up only during the R&D project itself. A ‘reasonable basis’ can be used, and this is something we can advise you on. Again, it all adds up.
4. Recognise new materials, products and systems
Experimental, investigative or systematic activities that directly relate to the creation or modification of a product, service or process can also be included in an R&D Tax Credits claim. However, be careful that this work specifically aims to make an advancement in science or technology, and isn’t simply ‘innovative’. This can be tricky, and again we can work with you on this.
5. Make sure you've not forgotten anyone
This one is more for medium sized enterprises but it’s well worth a mention.
R&D projects can involve numerous people from both inside and outside your company. Typically they might include team leaders, subcontractors, CAD engineers, project managers, cost accountants, quality control experts, testers, senior managers and many more. So make sure everyone’s work is considered in your claim.
6. Include all your eligible costs
In addition to the expenditure we’ve already mentioned, there’s a broad range of other qualifying costs which you may not realise are eligible. These are costs which could have arisen due to:
- Identifying scientific and/or technological uncertainties
- Analysing, designing and developing new technology
- Planning and managing projects
- Undertaking feasibility studies
- Defining technical objectives
- Software testing
- Reviewing new and competing technologies
- Testing the product or process itself
Additionally, some indirect support activities may be eligible for R&D Tax Credits such as:
- Training for staff involved in the R&D work
- Finance, administration and HR services specifically required to support the R&D activities
This is where the Tax Cloud portal comes in
The Tax Cloud portal offers a fully supported and guided way to make a fully maximised R&D Tax Credits claim without the hassle. It’s fast and easy to follow, and of course the R&D specialists at Myriad Associates (developers of the Tax Cloud) will be on hand to help at any time.
See the Tax Cloud portal for businesses to find out more. It’s also free to sign up, so why not get stuck in today.
- Submitting R&D tax claims since 2001
- 100% success rate
- Over €100m claimed and counting
- Industry leading specialists
- In-house technical, costing and tax experts
- Member of the Research and Development Consultative (RDCC) committee
Meet some of the team behind Tax Cloud