R&D tax relief can help companies move forward into the ‘new normal’

With uncertainty facing many companies due to coronavirus and the subsequent lockdown, many are looking to boost cash flow. One way to do this, which is frequently overlooked, is claiming R&D tax relief, says Shorts Accountants tax partner Scott Burkinshaw (pictured).

R&D tax relief was first introduced almost 20 years ago and is still widely under-claimed, even though the relief can be worth almost £25,000 in tax saved for every £100,000 of qualifying spend. As claims can be made retrospectively for

the previous two years, there are considerable amounts of cash to be unlocked by innovative companies. If you have never previously considered your company making an R&D claim, or if you have claimed in the past but may not have maximised your claim, now is an excellent time to (re)consider making a claim.

Who can claim R&D tax relief? R&D relief is available for companies seeking to achieve an advance in science and technology through the resolution of scientific and technological uncertainties. One of the main reasons that the relief isn’t

claimed by all those who are entitled is a lack of understanding of what this means in practice, with the level of innovation required to claim being overestimated.

It’s crucial to engage with an R&D

specialist who fully understands the legislation and guidelines as to which activities do and do not qualify for relief to ensure your company accurately assesses its ability to claim, and that any claim is maximised. For example, product development, process improvement and advances in software development can all lead to eligible claims. The relief is available to companies in all

sectors. Manufacturing, food, rail, health, packaging and transport are all areas where we have recently helped companies claim relief, along with the science-specific sectors.

Why do businesses not claim for R&D tax? Another reason why companies fail to claim is they overestimate the time required within the company to prepare and submit the claim. It is understandable there are many demands on your time when you are running a company, and never more so than now as everyone adapts to the ‘new normal’.

Customer engagement now a major challenge

One in three businesses say customer engagement is the biggest challenge they face during Covid-19 – with the finance sector among the hardest hit. Since the outbreak of

coronavirus, companies across the globe have had to adapt to new ways of working and the difficulties that come with it. New data from

Nottingham-based telecommunications provider Esendex reveals customer engagement to be the biggest struggle faced by one in three businesses right now (37%) – rising to 42% for those in finance. Almost a quarter of firms (24%)

are experiencing reduced demand for their services or products, while 14% say safely managing their workforce is their biggest endeavour. The survey also highlighted the

ways in which companies globally are dealing with the crisis – 40% have moved to remote working, while for 22% it’s “business as usual” with precautionary measures.

When it comes to mass remote

working, the education, finance and healthcare sectors have struggled the most – with 21% of finance companies stating this as their main Covid-19 challenge. Amy Robinson (pictured), senior brand development manager at Esendex, said: “The statistics show just how difficult the current climate is. “Business leaders

have a lot to think about – how to stay

operational, how to navigate the challenges of mass

remote working, how to keep employees safe and how to keep customers engaged. “We also learned that half of the

companies we surveyed are most likely to need SMS services for customer marketing and updates – rising to 62% in the finance sector. “The findings really highlight the

fact that firms are having to tailor the ways in which they communicate to deliver high levels of customer service – whether that’s by email, text, social media or even WhatsApp.”

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The best approach has always been to minimise the amount of time a company has to spend preparing the claim, and any good R&D provider should be able to work with the client to do most of the work. There does have to be some

level of input, particularly from the company’s “competent professionals” to explain the technical

advances and challenges in the R&D projects. But, on

average, this is usually about 1.5 to two hours of their time – not a lot if it

can save thousands in corporation tax.

R&D tax relief in the ‘new normal’ The ‘new normal’ has seen a switch from face- to-face meetings to interviewing the relevant staff virtually via Zoom and Teams, which avoids the time-consuming task of someone from the company writing up a technical report. This information is used to produce a

technical report that is submitted to HMRC along with the corporation tax return, once approved. This new way of working with clients to gather the information needed has worked well as business has adapted to making use of the technology to deliver business as usual.

Specialising in:

• Short-term Business Loans

• Selective Invoice Finance

• Supply Chain & Trade Finance

Whether just starting out or well established, businesses use finance for any number of reasons. Cash-flow along the supply chain is a frequent concern. Suppliers, tax liabilities and wages can’t wait. Assets and property require funding. An extensive range of financing solutions is available, with access to lenders across the whole of the market.

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