£4.3 billion has been ‘paid out’ to companies using HMRC’s R&D Tax Credit scheme

You might be surprised to learn that the government wants to encourage businesses to take on the risks involved in innovating their services and products to meet the needs of their clients.

It’s part of the drive to make the UK more competitive globally and HMRC is happy to cut your tax bill or pay you cash if you can satisfy their technical requirements. More than 42,000 SMEs took advantage of this in the last HMRC reporting year.

Only 17% of R&D tax credit claims are made by companies up to five-years-old

According to HMRC’s latest statistics, just 17% of R&D tax credit claims are made by companies up to five-years-old – meaning a significant lack of start-ups aren’t taking advantage. What’s more, large businesses are currently claiming the majority of funding available through this scheme. It could be argued that those companies who would benefit the most from this funding aren’t always receiving what they should be. Whether it’s an issue of time or cost, in many cases making a claim is much easier than expected.

“I’m sure my advisor has this covered”

“My advisor has this covered” can often disguise risky, poor quality claims, significant underclaiming or no claim at all. It’s hard to believe that the 18% of all the SMEs who claim are spending less than £10,000 annually on R&D.

Nervousness about what qualifies and the risk from HMRC’s quality drive could be at the core of this. Given the rise in spurious and misleading marketing this is understandable.

R&D Tax Credit scheme rules can create concern

There must be rules to protect us all as taxpayers. The HMRC tests around what activity qualifies are covered by simple phrases: “attempting to resolve a scientific or technological uncertainty” is a good example of that. It’s likely that only someone who is an experienced industry expert who understands whether HMRC’s ever more stringent needs will be met can judge if a company’s activity meets that test.

What qualified as a technological uncertainty last year is unlikely to be an uncertainty this year. Often a very conservative claim can be the result in the case of DIY claims and on claims not driven by a specialist technical examination.

Experts choose experts

48.3 Scaffold Design were introduced to us through a company in their sector who had also been claiming successfully using our robust claim process. Ben Beaumont, Managing Director stated:

“Our analyst in this sector, Linda Tomkins, went through our projects and was able to extract the activities that would qualify. Due to the technical nature of our work we needed this expertise and experience to ensure we were claiming in the way required by HMRC.48.3 are undertaking new projects that are pushing the boundaries in the Scaffold sector and developing new solutions. 48.3 is all about distinction; distinction through service quality, differentiating through continuous improvement. Working with a company with the same values as ourselves at MPA has made the claim process easier. Because of the quality of service and expertise they have provided, I have recommended MPA to many other companies who are now successfully claiming.”

Choose your advisor wisely

Ethics and standards

A high-quality advisor can make a significant difference to reducing risk and maximising value. Make sure your advisor is bound to professional ethical standards. We’re a member of the Association of Chartered Certified Accountants (ACCA), the world’s largest globally recognised professional body.

The tax rules change and are updated regularly. To be certain of the treatment of qualifying costs for externally provided workers, consumables or software, for example, needs professionally certified expertise. Our ACCA qualified staff give you assurance of the highest standards.

Industry insight and expertise

Knowing the tax rule detail is important but to make a quality compliant claim technical knowledge of the industry is essential to passing the “why is this an advance in science or technology” test.

At MPA our technical experts are the core of the firm. Postgraduate academic qualifications coupled with industry experience make the MPA claim process easier for their clients and the claims robustly compliant for HMRC. For example, Stuart Bentley, a Delivery Manager at MPA, graduated from Brunel University in Material Sciences and followed this with a PhD at Birmingham University.

Customer endorsement speaks for itself

Advice at no cost

If you’re not claiming, we provide a no cost or obligation discovery meeting where they can identify the scope of your opportunity. If you’re already claiming, we offer a no cost benchmarking meeting where you can understand both risks and opportunities with your current claim.

If you’d like specialist advice on R&D Tax opportunities for your business at no cost then get in touch.