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Myth busting R&D tax credits – it costs too much

Myth 2 - "It costs too much"

A common assumption we hear when speaking to businesses considering whether to make an R&D tax credit claim is that “it’s really expensive and that they can use the money elsewhere”. This is true to a certain extent however the money that you have spent on research and development has already been spent and what the R&D tax credit scheme offers is a way to claim some of that money back.

We like to think of the scheme in a similar way to a supermarket loyalty reward programme, where you as consumer get a financial benefit for purchasing things you planned to get anyway. In the case of R&D tax credits you could get up to 33p for every £1 spent on research and development.

How much does an R&D tax claim cost?

The cost of a claim is dependent on the amount that you spend on your R&D. At MPA our charges are usually a percentage of the claim value; in a nutshell if your claim isn’t successful you don’t need to pay us.

Do I need an expert to make an R&D claim?

The simple answer is no, you don’t need an expert to make a claim and we have some guides that can help you. The downside however is that although you can make a claim without expert advice, there is also a higher possibility of making mistakes and being found in an HMRC enquiry, as well as not getting the maximum value of your claim. By working with an expert, you can rest assure that you are getting the best value without the risk.

Unlock investment with R&D tax credits

 In its report “Unlocking Regional Growth 2017”, the CBI (Confederation of British Industry) outlines how businesses that planned to invest in R&D were significantly more productive than those who had not. This is being fuelled by the simplicity of the R&D tax claim process and the returns organisations can recoup.

Depending on the size of the business and whether it falls into the SME or RDEC (Large company) scheme, businesses can claim up to 33% or 10% for every £1 spent respectively. Meaning an extra £54,000 according to the current SME average claim value.

This relief can be received and used in various ways. It can be used to reduce costs such as corporation tax, received as a cash rebate, loss relief or a combination. No matter how you receive your relief, the scheme is designed to stimulate innovation so the more you re-invest in R&D projects each year, the more you could get back the following year and so on.

Claim what’s yours

 If you’ve invested in R&D activity and projects over the past two financial years or you’re planning R&D activity in 2020 then you should consider claiming back what is rightfully yours from HMRC. Improving productivity not only helps you run a more sustainable business, it can also improve your EBITDA (Earnings before interest, tax, depreciation and amortization) measure of financial performance and help boost innovation. In a challenging business environment and the need for businesses to be super Brex-fit, companies should claim without hesitation.

Use our free online calculator to find out how much you could claim or speak to a member of our team.

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