Make claiming R&D tax credits in 2021 your New Year’s resolution

Make claiming R&D tax credits in 2021 your New Year’s resolution

2020 has been a year like no other. All businesses have worked tirelessly to navigate the relentless storms that COVID-19 has created. It is unclear how demand will recover and cash will be tight for many clients for the next 6-8 months or more. It is therefore essential to ensure cash reserves are conserved and now is the opportune time to review whether you are eligible for Research and Development (R&D) relief.

R&D tax credits are often a forgotten tool to boost cash flow within a business. If a business qualifies, it could obtain a significant reduction to corporation tax payable, or a cash repayment.

HMRC acknowledge that all businesses will approach R&D differently and as such, their guidance is worded in a manner so as not to deter any market sector from applying.

A surprisingly wide range of business activities and projects can qualify. We ask our clients the following simple questions in order to determine whether the activities they have undertaken qualify for R&D:

·         What are you doing now, either internally or externally, that is DIFFERENT?

·         Why is it DIFFICULT? – i.e. what is the uncertainty you’re trying to resolve?

·         What are the RISKS involved? – i.e. are you spending time and money to try to reach a conclusion?

Activities such as new product development, improvements to staff efficiency, ICT integrations or upgrades and legislative changes necessitating the change to product or services all have the potential to qualify for R&D relief.

The relief is based upon the costs incurred and can be worth between 10p – 33p on every pound spent. Therefore, for every claim submitted for £10,000 you could receive a tax credit of £3,300.

The claim process with Kilsby Williams will be straightforward.  We will assist in the review of business activities to identify if they qualify for R&D and work with a business to identify all relevant expenditure that can be included in the claim.

In our experience, clients may not easily identify whether the work they are undertaking qualifies for the scheme because it is a natural part of their day-to-day business activities. To see if you could be maximising your tax relief, speak to one of our R&D Tax specialists for a no obligation consultation of your business activities and determine if you could benefit from a cash repayment.

If you have any queries and would like to discuss this further, please do not hesitate to contact Lucy Lloyd at lucy.lloyd@kilsbywilliams.com