HMRC data reveals R&D tax relief hotspot

New data published by HMRC has revealed the hotspots for R&D tax relief claims.

R&D tax relief is a tax incentive from the UK Government designed to encourage companies to invest in R&D. The specialist tax relief has been around since 2000 to help innovative businesses undertaking R&D related activity claim a generous tax deduction or a cash refund from HMRC.

West Yorkshire-based businesses topped the league for the number of claims for R&D tax credits in 2016-17 at 1,175 claims, followed by South Yorkshire on 625 and North Yorkshire on 360.

The largest number of claims across the region came from manufacturing companies (925) who collectively claimed £45m, followed by information and communications firms (465) who claimed £25m, followed by professional, scientific and technical businesses (400) who claimed £25m.

WHAT IS R&D TAX RELIEF?

Research and Development (R&D) Tax Relief helps innovative businesses undertaking R&D related activity claim a generous tax deduction or a cash refund from HMRC.

R&D tax relief is a tax incentive from the UK Government designed to encourage companies to invest in R&D. The scheme has been around since 2000 and last year over 25,000 UK companies claimed almost £2.9bn in tax relief.

PROFIT MAKING?

230% R&D TAX RELIEF

Profit-making SMEs can reduce their corporation tax bill by up to 230%, e.g. an additional £130 deduction on top of £100 spent of qualifying R&D expenditure.

LOSS MAKING?

£33k FOR EVERY £100k

Loss-making SMEs can choose to surrender their loss and receive a tax relief by way of a credit – a cash refund paid by HMRC of up to £33,000 for every £100,000 spent on qualifying R&D expenditure.

Clients normally get their money 4-6 weeks after submission. Different rates of relief apply for larger companies with a turnover in excess of €100m. Contact us for further details.

WHAT ACTIVITIES QUALIFY FOR R&D?

HMRC qualify research and development as overcoming technological and scientific uncertainties or challenges; aiming at achieving a technological and scientific advance that couldn’t be easily worked out by a professional in the field.

Whatever size or sector, if your company is taking a risk by attempting to resolve these uncertainties, then you may be carrying out qualifying activity. This could include creating a new process, product or service or improving on an existing one.

To claim R&D relief you need to explain how a project:

looked for an advance in science and technology
had to overcome uncertainty
tried to overcome this uncertainty
couldn’t be easily worked out by a professional in the field

QUALIFYING R&D EXPENDITURE

Turn your qualifying R&D costs into valuable tax relief

Staff Costs

The cost of directly employing staff who are actively engaged R&D activity. Staff costs can also include class 1 NIC, pension fund contributions and bonuses.

Externally provided workers and sub-contractors

The cost of paying a staff provider for staff provided to the company, or a sub-contractor who is directly and actively engaged in carrying out R&D activity.

Consumable items

Consumable or transformable materials used directly in carrying out R&D.

Software

Revenue expenditure incurred on computer software employed directly in R&D.

Utility Costs

Power, water and fuel used directly in carrying out R&D.

OVER £22 MILLION SECURED

Jeffreys Henry LLP are specialists in hunting down every qualifying R&D cost and activity in your business.

In recent months, we’ve secured over £22 million of R&D claims on behalf of our clients.

STARTING YOUR R&D CLAIM

Jeffreys Henry LLP provide an end-to-end service that makes claiming R&D tax credits easy for you.

1

FREE R&D ASSESSMENT

We talk to your finance and tech team to hunt down every qualifying R&D activity.

2

R&D NARRATIVE

Our dedicated R&D account manager will work with you to document each R&D activity and split out the qualifying costs.

3

SUBMISSION TO HMRC

Once finalised, we’ll submit your claim to HMRC’s specialist R&D unit.

FURTHER R&D TAX ADVICE

CONTACT US FOR FURTHER INFORMATION, OR TO REVIEW YOUR R&D CLAIM.

PARMINDER CHATTHA

Partner - Corporate and R&D Tax

Parminder specialises in Research & Development Tax Credits, leading the R&D department at Jeffreys Henry LLP. Since joining the Firm in 2015, he has been working closely with both SMEs and large businesses to analyse and maximise their Research and Development claims. He has so far secured over £70 million in R&D tax relief and credits for our clients.

HMRC data reveals R&D tax relief hotspot

KATE GREENHOUGH

R&D Director

Kate is a CTA qualified tax specialist with significant R&D tax experience. Kate has over 10 years of specialist experience in advising start-ups to PLC analyses, preparing and submitting robust R&D tax relief claims and Patent Box claims in line with the latest HMRC guidance. Her sector experience spans FMCG (fast-moving consumer goods), automotive, financial services, healthcare, manufacturing, construction, and food and drink.