Myth Busters: “I’m already getting the maximum return from my R&D Tax Credit claim”
You might think your existing accountant or R&D Tax Credit specialist is claiming for everything they can. But, when reviewing previous claims, our experts frequently come across additional things that can be claimed for within HMRC’s rules, boosting the value of a claim.
Top 5 things you should check your R&D Tax Credit claim includes:
- Time spent on R&D
While everyone knows you can claim for time spent on R&D projects, the key question is, “When did the R&D project start, and when did it end?” Get this wrong and it will cost you money, either in lost Tax Credits (underclaiming) or HMRC penalties (overclaiming).
You need to make sure you can pinpoint when you were first aware of the technical uncertainties associated with the technological or scientific advance being sought. And, don’t forget to include the qualifying indirect activities that support your R&D activities.
Many companies use specialist contractors to undertake work they can’t do themselves. If this work supports a R&D project, it can be included in your claim – even if it isn’t R&D in its own right. As you might expect, there are a few checks and balances needed to make sure you are claiming for the right things, but it is worth checking the detail.
- Agency personnel
HMRC allows you to claim for the time spent by non-employees on work they undertake as part of your R&D projects. Changes to the scheme in 2012 removed the strict ‘three leg rule’. So, if you are still excluding certain groups of agency workers, we recommend you review their circumstances, as they could now be eligible to be included in your claim.
Items that are ‘consumed or transformed’ by the R&D process can also be included in the claim. This can range from components purchased to construct a prototype, through to charges for fuelling machinery. While the costs of individual items may be small, we often find that the quantity of items used and scrapped can have a significant impact on claim value.
This category of expenditure was not included when the R&D scheme was first launched and, while it has been allowable since 2004, many people still forget to include it. Any software used directly in the R&D process – and in some cases indirectly – can be claimed as an allowable expense.
Did you know?
90% of the existing R&D Tax Credit claims we review for new clients at MPA are wrong.
Our experts can help you make the most of your R&D Tax Credit claim. Get in touch or call 0808 208 5221 to set up a free five minute consultation