Eight Myths That Prevent Small Businesses From Claiming The R&D Tax Credit

Posted by on 17 Jun 2015 in R&D Tax Credit | 0 comments

I am astonished at the low take-up of the Research and Development Tax Credit by small businesses in the UK. It’s one of the best ways of saving tax, and conserving (or getting repayments of) real cash in your business. Large businesses, with their high paid accountancy firms, are doing well, so why isn’t your SME business benefiting too? The UK is known as fostering innovation in business, yet this key benefit is not being taken full advantage of. Why is this? Let’s take a look at some of the reasons. Myth 1: You have to be inventing something brand new. Not so. The R&D tax credit is not reserved for companies that invent something really novel or register a patent. It can also be claimed by  companies that are improving or modifying an existing product or improving a manufacturing process—that is, making a product cleaner, quicker, greener, cheaper, etc in an innovative way.  The only limitation is that is must involve science and technology. So, computer software, architecture, engineering, energy production, waste processing, medical devices and so on are all good candidates for the R&D tax credit. Myth 2: The R&D tax credit is only for organisations with guys in white coats in laboratories fiddling with test tubes. Whilst it is true that companies involved in basic research are clearly prime candidates for this R&D tax credit, the credit is very much about encouraging applied science – taking new ideas and making things happen with them. Solving a customer’s problem or a production issue using known scientific principles is right where this credit is aimed.   Problem solving on the shop floor, in the field, on the site, behind a computer – all may eligible for the R&D tax credit. Myth 3: The R&D tax credit isn’t for companies in my industry. Wrong again. Thousands of businesses across the country from a wide range of disciplines claim the credit, including civil engineering and architectural companies and businesses involved in everything from chemicals  to computer software and electronics, food processing and agriculture as well as energy such as solar, wind and oil and gas. Writing yourself off or bad advice from professionals are the biggest blocks to companies like yours claiming their due R&D tax credit. Myth 4: The R&D tax credit is not for me, it is only for big companies. It is true that the big guys, with their armies of tax lawyers, are all over the R&D tax credit, but thre are special advantages that SMEs have that re denied to big companies. Specifically the paybacks are much more generous. So, if it is good for a big company to claim, think how much better it is...

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Does your Company’s Work involve Science and Technology?

Posted by on 18 May 2015 in R&D Tax Credit | 0 comments

And are you using it to drive your company forwards? If you are even half thinking “this applies to us”, then I ask “Are you claiming Research and Development Tax Credits for your efforts?” The UK Government rewards companies that engage in technical product and process development because those companies have historically created more jobs and strengthened the economy.  It is one of the easy ways that the government supports innovative businesses – of all sizes right down to the smallest companies. The reward is for investing in research and development activities is managed as tax credit through the Corporation Tax system. It can significantly reduce, or even eliminate, your company’s tax obligation. You don’t have to be in profit, but you must have completed your first year’s trading. Although it is handled through the tax system it is nothing to do with tax (apart form entering some numbers on your CT600 form) and practically nothing to do with accountancy. It is all to do with telling the specialist HMRC inspectors why the development work you are doing qualifies. And then working out the allowable costs you can claim. Want to know how to pay a lot less tax? Contact us today for a no obligation...

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Funding For Business Innovation Using R&D Tax Credits

Posted by on 18 Apr 2015 in R&D Tax Credit | 0 comments

Looking for funding to help your R&D budget? Maybe you are missing out on an easy to access funding source that recognises what you have already done, and provides you with the cash to do more of it. Many business taxpayers believe that they have to be advanced research scientists inventing something completely new or developing state-of- the-art cutting-edge technology to qualify for the Research and Development Tax Credit. Or they think they have to be doing “research” in dedicated laboratories. These efforts do qualify, but there are many other activities that also qualify. The tax definition of “research and development” is really very broad. You do not need a dedicated R&D department or laboratory, and it is not restricted to biotech, semiconductor, or similar “high-tech” companies in order for your projects to be eligible for R&D tax credits. Most businesses across a wide range of industry types are routinely involved in activities to refine, develop or improve their products and processes to stay in the game (or ahead of it), and thus potentially qualify for the funds. Regardless of the nature of a specific project, as long as qualified research and development activities are being performed, there is an opportunity to put in a claim for R&D tax credits. This incentive applies to many businesses, of which a significant number are in manufacturing. Software or technology companies, as well as architectural and many other types of firms, if they have taken on the economic risk for the project and have met the retention of rights requirements, can qualify. Smaller businesses can qualify for the credit as well as large companies. Many taxpayers have claimed many thousands of pounds of tax credits for their qualified research expenditures. Qualified research expenditures include costs associated with time spent, materials used and certain specific overheads. The research and development tax credit is available for businesses developing new or improved products. It also can apply to: Research aimed at discovering new knowledge Searching for ways to apply new research findings Engineering and designing a new product Designing product alternatives Significantly modifying of the concept or design of a product in a novel way Testing innovative designs Designing, constructing and testing preproduction prototypes and models Experimenting with new material and integrating the material to improve manufactured products Engineering activity to advance the product’s design to the point of manufacture Integration analysis Experimenting with new technologies Engineering to evaluate new or improved specification/modifications in terms of performance, reliability, quality and durability Developing and modifying research methods /formulations /products Research aimed to significantly cut a product’s time-to-market Research aimed to obtain more efficient designs Developing new production processes during prototyping and preproduction phases Paying outside consultants/contractors...

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To Old To Innovate? Not On Your Nellie!

Posted by on 11 Mar 2015 in R&D Tax Credit | 0 comments

Many of the people we talk to in companies have been, to put it politely, ‘around the block a few times’. Interesting lives lived and much experience and expertise gathered along the way. They are still doing new things and driving their business forwards. Yet they have been persuaded by ‘professional advisers’ that what they do is not innovative. They are experienced and are really good at what they do and especially good at finding new ways to use current tools to find a solution to their own, or their client’s problems. The ‘professional advisers’ say that such work is not innovative and so dissuade them from applying for the great reward scheme offered by the government through the Research and Development Tax Credit scheme. In some cases their advice is correct. If you are merely applying a known set of tools and experience to predictably deliver a new solution, then that is not innovation but the application of acquired skills. However, take a slightly different circumstance where you think you can solve the problem, but it requires some investigation, a new approach, or putting some existing items together in a different way with uncertain outcomes, then that may well be classified as innovative. People, skilled and experienced people, like you are innovating like this all the time – they have done is so often it seems like ‘business as usual’. But it is innovation with experience that produces new solutions for your company and its clients. It is the source of wealth that keeps Britain Great. Experience comes with age. Not by doing the same thing over and over, but by continuing to push the boundaries and apply all that you have learned along the way. Those experiences are likely to lead you to new methods more quickly than a younger person who has not yet learned all the ways that do not work in the way that you have. Have a look at the article referenced below and then rethink the advice you have been given. You really should be claiming all you can for your innovation so you can grow your innovative efforts for the benefit of your company and UK plc. Tony Lord Director Butler, Basford and Lord Experts in Research & Development Tax Credits for Innovative Businesses...

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Software Game Developers Can Claim R&D Tax Relief Cash

Posted by on 18 Feb 2015 in R&D Tax Credit | 0 comments

If you are in the software industry you will be aware of the expensive and rapidly rising costs of development activities. In particular the software effort for the game development cycle has become increasingly difficult to sustain. Many companies are feeling trapped by rising overheads and have been reluctantly forced to consider outsourcing development activities to compensate. Luckily, tax incentives based on past developments (successful or not) are available to software companies, cash coming into the company that can ensure crucial product developments remain in-house and even be the factor that keeps a company running. More often than not, software companies will discover that they qualify for the benefits of the R&D tax credit by accident. Loads are simply unaware of its existence or assume (or are even told by professional advisers) that it doesn’t apply to them. If your company has invested time, money, and resources toward the advancement and improvement of designs and processes, then you most probably will meet the requirements of the R&D tax credit. More gaming development activities may qualify than you first think. In addition to designing and testing new games, software coding, hardware development, and iterative testing can all be eligible for this tax break. If you are a game developer and the above activities sound in any way similar to what your company does on a day-to-day basis, the R&D tax credit is an available and powerful government endorsed incentive to which you are probably entitled. If you would like to find out how you also can obtain thousands to millions of dollars in tax credits, read on. The R&D credit is a reward for UK Companies that perform research activities that fit the HMRC’s broad guidelines. You do not have to be writing truly ground-breaking software, but you must show that you are driving the industry understanding forwards. It’s a lot easier than it sounds!. Game developers simply need to develop new or improved software features or functionality and go through a development process. It is important that there is the possibility of failure in the development. Indeed the costs of unsuccessful projects are also eligible. If you don’t ask, you won’t receive You do not need to be a big company, indeed smaller companies benefit from claiming relatively larger amounts that big companies can. Sadly, it remains the case that the two biggest roadblocks for businesses taking the R&D tax credit iare wrong professional advice and self-censorship. It was recently 19 out of 20 small and medium businesses that are eligible for tax incentives, such as the R&D tax credit, fail to take advantage. Small and medium business owners frequently think that only Nobel Prize winners and rocket scientists...

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