Top Tips to Claim Research and Development Tax Reliefs

HM Government rewards business that engage in R&D activities by providing research and development tax reliefs . However, as can be expected, claiming tax relief is a complex process. You can claim it as cash sum or reduce your business tax liability. Here are some ways to obtain maximum R&D tax relief. 



1. Know the definition of R&D
HM Revenue & Customs specifies what can be thought about carefully as R&D for the purpose of R&D tax relief. Know about it before you start your project. That is the best way to ensure your claim for research and development tax reliefs goes through with minimum bother. A brief definition should help: 
  • The project should advance science and technology and it should be proved that a professional in the field could not resolve the technical issue the company faces. 
  • You need to explain what you did to surmount uncertainty which could be something as simple as explaining the successes and failures of the project. 
  • SMEs that have less than 500 employees and a turnover of 100 million Euros are eligible to deduct extra 130% of qualifying cost from annual profit in addition to the usual 100% deduction. 
It becomes easier to claim R&D tax relief if you plan and prepare the project to comply with HM Revenue & Custom’s guidelines. Your tax relief advisor can help you get it right. 

2. Be precise and meticulous about technical information 
The government is not going to accept rough claims, especially after the event. It helps to compile on-point information about what activities were carried out to bolster your claim. Technical information is best compiled at the start but if that has not been done your tax consultant can assist in framing a technical report to shore up your claim for R&D benefit. 

3. Quantify and qualify costs 
HMRC is specific about what qualifies for R&D tax benefits and what does not. Should you claim costs under a heading that does not qualify then your claim is likely to be bogged down. Your R&D tax expert can certainly assist with this matter to make sure your claim sails through. 

4. You can claim expenses of previous years
R&D projects tend to be spread over several years. It happens that you may have become aware of this relief only recently. There is nothing to fret about. You can claim reliefs for previous financial years too with the help of your tax consultant. You could get your cash back from taxes already paid. 

5. Even losses are admissible
SMEs that sustain a loss in their business can put in R&D Claim that will result in 14.5% cash credit to help them get cash infusion in their business. Whether you should claim cash or set loss off against future profit is something on which your R&D Tax Consultant is the right person to turn to for guidance. 

Your company accountant may be able to handle the matter of research and development tax reliefs but you will find it is better to engage an expert. 

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