R&D tax is something that is much-talked-about but not-often-enough understood. You just won’t know enough about it until you have investigated a claim and seen what areas of your business are eligible. Tax is a expert area of business. There are even accountants that don’t want to deal with R&D tax, so that’s where a specialist like Harlands come in. Here is our guide on how to find out what parts of your business are eligible for an R&D tax claim.
Assess what you do
Ask yourself the following questions to see the extent of your R&D tax claim –
• Have you used technology to develop new products, new tools of the trade, such as software, or new services? This is the core of what a traditional R&D tax claim looks and feels like. Manufacturers get it. But developing a new tool, service or piece of software is also eligible for and R&D tax claim
• Have you attempted to make improvements to your existing product or products with technical alterations? It isn’t just making something new that R&D tax is designed for – making things better is another element of a successful claim. People think that R&D tax is just about developing a brand-new product. Improving what you already offer is often the cause of R&D claims for our clients.
• Have there been any technical problems with your products that you have needed to resolve? Resolving issues, such as dealing with new legislation are also part of a successful R&D tax claim. If you have needed to sort these out, then you will probably have a valid claim.
• Have you developed a more efficient way to deliver what you do? Products and services can be delivered to customers in a more efficient way through technical or technological solutions. If you have been through this in the last three years or so, then this is likely to be eligible for a claim.
• Have you tested new ways of working, new equipment or new techniques in production? Again, this is an integral part of any R&D tax claim. Trying to get better at what you do is a vital part of research and development. If you are performing this, then you can be primed for a claim.
• When starting a new project, did you think, ‘I really don’t know how this will turn out?’ If so, then the large element of risk involved is a sure sign that your project is one that is eligible for an R&D claim. We all try new things from time to time with our business. If this has been part of what you do, then you will most probably have an R&D claim waiting to be processed.
• Have any of your projects failed? Has this been for technical reasons? If you try something and it just doesn’t work out, then this is not a reason for an R&D claim to be invalid. Not everything you try will be a success – not first time, anyway. So, the projects that didn’t make it can become a part of any successful R&D tax claim, if presented in the right way.
R&D tax claims are being processed all the time. The government has set aside billions of pounds to reimburse businesses that have taken a commercial risk. If you have answered ‘yes,’ to any of the questions above, then we need to speak to you as a matter of urgency.
By Harlands Accountants LLP