BUSINESS & FINANCE BSEE Claiming back R&D costs


doesn’t have to be complicated I


Making a claim for R&D tax relief can really help a company’s cash flow. But most businesses opt to delay, or even dismiss, what can be a very costeffective process, says Greville Warwick, director of MCS Corporate


n today’s fast-moving commercial world, innovation is often the key to success. R&D activity commonly underpins a company’s operations, with novel software and IT system iterations, new product launches and service enhancements driving growth in all sectors. But did you know that 97 per cent of eligible businesses don’t make a claim to recover the costs of the essential R&D they invest in? That’s a


staggering number of firms missing out on the benefits of readily available government funding designed to help them offset the often significant costs of R&D. Are you one of them?


At MCS Corporate, we have long-standing experience of helping businesses of all sizes to identify and access the most appropriate funding options for their specific R&D activity. A range of grants can be accessed to help finance the pioneering business activity of forward- thinking firms operating in a wide variety of industries – and we have the expertise, insight and accountancy training to help you navigate all the options.


for R&D Tax Credits?


Research and Development Tax Credits form a key part of government strategy to boost innovation in business. Reducing the real cost of investment in improving products and processes, they remain one of the largest single government funding mechanisms available for business. This is a form of corporate tax relief that can either reduce a company’s tax bill or, for some SMEs, provide a cash sum – with all calculations based on the company’s qualifying R&D expenditure.


There’s no lower or upper limit on the level of R&D costs your company could recover via this route. As a guide, a company will typically get a tax credit of around 26 per cent of costs incurred in qualifying activities, or up to 32.6 per cent for a loss-making company receiving a cashback payment. Either


Could you qualify


Other tax relief options


Beyond R&D Tax Credits (or RDEC tax relief at 11 per cent for larger companies), there are three other ways your business could potentially be benefiting from R&D cost recovery. The first of these is the Research & Development Allowance or RDA. Accessed as a valuable adjunct to or in support of R&D Tax Credits, the RDA is available to all companies and is based on balance sheet capital allowances that can be realised against capital assets used for R&D purposes. It enables the offsetting of up to 100 per cent of capital expenditure on qualifying fixed assets, such as buildings, equipment, fittings and IT systems. Another option is Land Remediation Relief. This applies for expenditure incurred in cleaning up land or buildings acquired in a contaminated state – defined as either causing or having the potential to cause ‘relevant harm’ to humans, animals,


waterways or buildings. It can provide a deduction of 100 per cent as a relief from corporation tax in qualifying situations.


Benefits of Patent Box


Finally, you might like to consider the potential benefits of Patent Box – either for your own company or firms you may be associated with. This is an R&D tax relief scheme that enables companies to apply a lower rate of Corporation Tax (which could


potentially be as low as 10 per cent) to profits earned after 1 April 2013 from their patented inventions and certain other innovations.


www.mcs-corporate.com


way, it’s an option that’s definitely worth exploring – especially if there’s no cost to you until any claim is actually successful. Importantly, R&D Tax Credits may also be used to cover a large proportion of the costs of any staff directly involved in R&D activity, as well as any relevant administrative and support roles.


VISIT OUR WEBSITE: www.bsee.co.uk


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