It is frequently publicised by HMRC and other tax consultants that the government’s pledge to support innovative companies through the Research & Development (R&D) tax relief scheme has been greatly under-claimed in recent years.
At Streets, we have put our heads together to consider who might be missing out on this very generous tax relief for companies. Whilst you’d be forgiven for thinking that “Research & Development” is only carried out by companies carrying out scientific research or by pharmaceutical companies and wouldn’t apply to you, the definition of R&D covers so much more. Quite surprisingly, latest HMRC statistics (FY 2015/16) suggest that it is the Manufacturing industry that makes the most R&D claims, with roughly 30% of all claims being made by manufacturers.
So is your manufacturing company doing R&D?
The aim of the relief is to promote the advancement and furtherance of knowledge in the field of science or technology. This means that a qualifying project should be innovative for the whole industry not just your own company. In respect of a manufacturing company, this may be the development of a specific production line to increase efficiencies, or a new manufacturing process using different products or techniques. If the production line is bespoke to your product and/or the development is innovative to not only you but other competent professionals in the industry, it is likely to qualify for this relief.
How Much Relief Could You Be Entitled To?
For SMEs, the relief works by uplifting expenditure incurred during the project by 130%. This means that for every £100 spent on eligible R&D, a tax paying SME can save £44* in Corporation Tax.
Alternatively, if loss making, the losses arising from qualifying R&D expenditure can be surrendered for a 14.5% tax credit. For every £100 spent on eligible R&D, a loss making SME can claim a repayable tax credit of £33.
You’re a manufacturer; your company recently undertook a project that you think may qualify for this relief, what do you do now? Contact Us
Our Tax Department houses a wealth of knowledge and experience regarding R&D Tax Relief and boasts a 100% success rate in assisting our clients with claims. Our approach is flexible to suit your requirements and we ensure all claims are delivered to the highest standard to ensure a straightforward acceptance process with HMRC. We will support the company throughout the claim process and beyond submission, in the unlikely event that HMRC enquire. We therefore offer this service on a no win no fee basis.
* tax savings and rates based on financial year 2017/18