CCR2 Looking forwards
Time to claim the money due to you
Most credit collection firms should be making an R&D tax credit claim
Ian Cruickshank Associate director, R&D tax relief consultancy Catax
Ian.Cruickshank @
catax.com
The credit collections sector is awash with innovation but mention ‘R&D’ to most of the industry’s leaders and it is a phrase normally considered a bit alien. This is the mistake that is costing the
majority of these businesses tens of thousands of pounds a year because it means they miss out on one of the most lucrative government incentive schemes available to UK firms.
Cash reimbursements The R&D tax credit scheme has been providing reductions in corporation tax or cash reimbursements to innovative companies for 20 years now. The problem is that firms in the credit and collections industry commonly assume
that what they do is not in the same league as advances made in pharmaceuticals, aeronautics, and other fields. This is why take-up of the scheme is so
low, but the irony is that sectors that rely heavily on software can often claim on a much larger proportion of their work than those focused on more traditional inventions. Credit, collections, and risk management
is one such sector. It relies heavily on software development but the constant stream of iterations is so every day that it is taken for granted.
Myths Even among those companies that are aware of the scheme, managers often
All these misconceptions reduce the number of legitimate claims being made, despite the average benefit in this sector totalling £52,000 in the first year — certainly a significant sum
believe the process to be too difficult, too time-consuming or wrongly assume that work done by specialist contractors, including software developers, does not count. That is not true either, but all these
misconceptions reduce the number of legitimate claims being made, despite the average benefit in this sector totalling £52,000 in the first year — certainly a significant sum.
Reality In reality, we have discovered that just over 60% of businesses in the credit and collections sector have a legitimate R&D tax credit claim when we have been invited to carry out a detailed, one-day survey of their business activities. HMRC’s broad definition of R&D is helpful here. A project must seek to resolve
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www.CCRMagazine.com July 2020
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