Dispelling R&D Tax Credit Rumours
We often get insights into the many R&D Tax Credit rumours that are rife in the business community. This article will dispel the rumours to bring you the truth about the valuable opportunity of R&D Tax Credits. Below are the top seven myths.
“R&D Tax Credits is only for people in white coat” - FALSE
R&D Tax Credits is open to more sectors than you think! - TRUE
R&D Tax Credits allows organisations from all sectors to recoup substantial costs as cash or credit for every year of qualifying R&D activities. Momentum works with every sector from security, manufacturing, food and drink to creative industries, digital and technology to ensure they claim what they are legitimately entitled to.
“Claiming R&D Tax Credits is easy and anyone can do it” – FALSE
It is complicated, technical and time consuming … but we do all the work so you don’t have to - TRUE
It is true that claiming R&D Tax Credits is a complex process. It requires knowledge of your technology combined with in-depth knowledge and understanding of the guidelines and HMRC legislation. That’s why we designed the Momentum 90-10 principle. It’s simple – we do 90% of the work, you input just 10% initially to discuss potential R&D activities and expenditure to achieve a successful outcome.
“R&D Tax Credits are only for companies that are inventing something brand new” – FALSE
Companies that have attempted to design a new product, process or system or improve an existing one may qualify - TRUE
You do not have to be inventing a brand new product to qualify for R&D tax relief. More often than not it is claimed by companies who are attempting to improve existing products, services or processes.
Any company that is involved in technological or scientific problem solving could be eligible for R&D tax relief.
“We don’t pay corporation tax so we can’t claim” – FALSE
Companies can claim whether they are profit-making or loss-making – TRUE
All limited companies can potentially claim R&D Tax Credits for showing levels of innovation. R&D Tax Credits work by allowing your business to include an additional deduction in calculating its taxable profits. Real tax savings can be achieved whether your company is tax-paying or loss-making.
“You can only claim if an R&D project is successful” – FALSE
Costs associated with all eligible R&D projects can be recovered, regardless of outcome – TRUE!
Believe it or not, failure can often be a sign that you are carrying out eligible R&D. It’s not always possible to resolve problems or uncertainties, and failure can be a sign that the work couldn’t be easily worked out by a competent professional in your field. HMRC’s definition of R&D, for the purpose of tax relief, emphasises that the project must seek to accomplish an advance in science or technology.
“Only large companies qualify for R&D tax relief” – FALSE
R&D Tax Credits are available to companies of all sizes - TRUE
When it comes to R&D tax relief there is no requirement with regards to the size of the company. Small and medium-sized enterprises (SMEs) are eligible to claim as well as large organisations. In fact, separate schemes are in place for profit-making and loss-making SMEs and large companies with different tax relief rates. It is not the size of the business that affects your eligibility to claim but the work you do.
“All R&D companies are the same!” – FALSE
Every company is different. It’s important that you work with a reputable company that understands your needs. – TRUE!
As this is a complicated area of tax legislation, it is paramount to choose a specialist advisory firm that focuses solely in R&D Tax Credits. This is where we excel.
We are an award-winning company with a proven track-record in achieving almost £100m in enhanced R&D. With 100% success in R&D Tax Credit claims, our team of R&D technical analysts, R&D finance experts and specialist business consultants have the knowledge of legislation to optimise your claim and understand the context in which your projects are being carried out to identify all qualifying activities and expenditure.
To find out more about R&D Tax Credits contact Momentum on 028 9140 4030 or send an email to email@example.com