If your client’s business is a startup or in its infancy, claiming R&D tax credits can be immensely beneficial. The significant financial benefit of R&D tax credit is invaluable for development. At this early stage, they might say they’re too busy to research claiming R&D tax credits. However, if your client is an SME or a young business, claiming R&D tax credits before their first tax return will yield great results. Freeing up technological assets and saving thousands of pounds in tax credits is a huge developmental boost.

First things first, when is the best time to apply for R&D tax credits? Knowing HMRC’s schedule and timing parameters for processing claims is vital. Being aware of this information will help your startup client plan their R&D tax credit claim. Read on to find out how to complete it easily before their first tax return.

How far back can I claim?

If your client wants to claim R&D tax credits you need to know when their accounting period starts and ends. HMRC places a time limit of two years on claims. This is due to the fact that R&D tax credits are a form of Corporation Tax relief. Typically, the deadline for amending a Corporation Tax Return is 24 months after the end of the relevant accounting period.

• Example: A business files accounts on December 31st each year. It has until December 31st 2021 to claim any qualifying activities it undertook between January 1st 2018 and December 31st 2019. After December 31st 2021, the business can no longer claim R&D tax credits on activities from the accounting period 2018-19.

Many businesses make it so their accounting periods end on March 31st. This is for simplicity’s sake, as it is in line with the tax/fiscal year. This also removes the risk of any confusion of which time scale to use when it comes to applying.

‘What if my client undertook a project before the start of their earliest claimable accounting period?’ We hear you ask. Don’t worry, they can still claim qualifying expenditure from the project if it continues into the two most recent accounting periods. Though this will not be the entirety of the R&D costs of the project. This also applies to work your client is in the process of completing. However, it must prove to be resolving a technological or scientific uncertainty.

Read about the projects that qualify as R&D here.

What if my client is a startup?

The first year of business for startups tends to be less structured when it comes to accounting periods. When a business gets registered with Companies House, its incorporation date is set at the date of registration. This is also called the nominated registration date. This means the accounting period for the new business is set at twelve months from the end of that month. Of course, this may prove not to be so convenient moving forward.

As a startup, your client’s first few accounting periods can be anything from 6 to 18 months before they submit their first tax return, meaning the accounting period relevant to their claim won’t be two years long. This is important as it will dictate the number of qualifying activities that can be a part of the claim. This in turn will influence the worth of the R&D tax credit claim.

• Example: A new business or startup is set up on 12th June 2022. Its first accounting period starts from the 1st of June that year. This period then lasts for 16 months, ending on 31st October 2023. The company has until 31st October 2025 to claim any qualifying costs between 31st June 2022 and 31st October 2023.

Remember, whatever the length of your client’s accounting periods, the deadline remains two years from the end of each one.

To read about how to check the eligibility of your client’s business here.

Help for startup claimers

Startups claiming R&D tax credits for the first time are able to benefit from HMRC’s Advance Assurance scheme. This allows first-time claimers to understand their eligibility for R&D tax credits made prior to submitting a full claim. This takes the pressure off your client’s R&D tax credit application and allows them to plan ahead. Advance Assurance is a resource that is criminally underused!

Your client can apply if:

• They are an SME.
  Planning to, or already have done, R&D.
  Part of a group where none of the other companies have claimed R&D tax credits.

Here is the information you will need to have to hand:

• Your client’s company accounts.
• Your client’s company registration documents.
• Correspondence from HMRC.
• Any previous tax returns (not relevant for startups or infant companies).
• The name of the individual your client would like to put forward to discuss their R&D application with HMRC. This person should have direct knowledge of your client’s R&D activities.

You can find full details of how to apply on the Gov.uk website.

Still unsure? We’re here to make it simple

made.simplr offers online R&D tax credit software that makes it easy to track your client’s projects in relation to their accounting periods. In this way, they’ll always know when R&D activities are approaching a claims deadline. Inputting financial accounting data into our system takes no time at all due to integration with Xero. This is a big time saver, as you and your client no longer have to find out when R&D work got completed. Quickbooks and Sage integrations are on the horizon too!

By signing up for free to our system your client will also gain access to a team of seasoned R&D tax credit specialists. Many of our team have worked within HMRC processing tax credit claims. As a result, they can offer startups invaluable advice on when it is best to apply for R&D tax credits. Furthermore, they can help them secure Advance Assurance by reviewing their application and giving suggestions.

Book a demo with us today.

Finding out how much your client can claim through R&D tax credits can be difficult for many reasons. As a result, it makes sense to use an R&D tax credit calculator to give their claim an estimated worth. This will allow your client to get a preview of how much they will be saving by claiming R&D tax credits.

Calculating the value of an R&D tax credit claim by hand is difficult due to the number of factors that must be considered. Things like qualifying costs and the size of your client’s business, to name a few, are all taken into account. It can often be hard to see how each of these areas interacts with one another. That’s where a tax credit calculator comes in.

Although an R&D tax credit calculator does not provide a %100 accurate total value of a claim, read on to find out about the benefits and limitations of using one.

How to calculate the R&D tax credits

Having a ballpark figure of how much your client can claim is important as it will allow them to plan ahead. This is relevant as R&D tax credit claims can take a few months to process. During this time, they will be able to reassign R&D assets and prepare to allocate the additional resources.

Using an R&D tax credit calculator will also make your client aware of their company size and overall claimability. This information is important for maximising an R&D tax credit claim down the line.

Read more about tips to maximise an R&D tax credit claim here.

How an R&D tax credit calculator works

All R&D tax credit calculators will ask your client to input information about their business. The software then uses these numbers to calculate how much their claim is worth. This will be a percentage return on the total.

The factors that affect the percentage of return your client is eligible for, are as follows:

• The size of the company.
• The amount of corporation tax your client pays each year.
• If your client’s business is profit or loss-making.

An SME company is one that:

• Has fewer than 500 staff on the payroll.
• Has a turnover of less than €100 million.
• Has a balance sheet worth less than €86 million.

Any business exceeding one of these figures is considered a large company.

Loss-making SMEs can still claim through the SME scheme, though they have a few more hoops to jump through. Oftent loss-making companies are able to claim the maximum percentage of R&D tax credits. So whatever the position your client is in, they can claim anywhere from 14.5% to 33% as an SME and up to 13% as a large company.

For more info on the types of companies that can qualify for R&D tax credits click here.

• Example calculation for a profit-making SME

Let’s say an SME has a yearly profit of £350,000 and a qualifying expenditure of £80,000. With Corporation Tax before an R&D tax credit claim of £66,500, the calculation is as follows:

£80,000 x 130% = £104,000 (enhancement – the SME scheme allows for an ‘enhancement’ of R&D expenditure by 130%)

£350,000 – £104,000 = £246,000 (revised profit)

£246,000 x 19% = £46,740 (Corporation Tax)

£66,500 – £46,740 = £19,760 (Corporation Tax saving)

This results in an R&D tax credit claim worth approximately 25% in savings. Although the numbers will vary between companies, this percentage saving is quite common for SMEs who are still profit- making after R&D tax relief.

• Example calculation for a loss-making SME

In this example, the SME has made a £200,000 loss with a qualifying expenditure of £75,000. As a loss-making company, they will have corporation tax of £0. This is because there are no profits to tax.

£75,000 x 130% = £97,500 (enhancement)
£200,000 – £97,500 = £297,500 (loss after deducting enhancement)
£75,000 x 230% = £172,500 (maximum losses to surrender for R&D tax credit/cash payment)

At this point, the business has a choice. They can either keep their losses to carry forward into the next tax year. (This would be to use them to offset future profits against tax). Or, option two is to surrender the revised losses to HMRC for a cash credit. This cash credit is at 14.5% of the total value of the surrendered losses.

If losses get surrendered in this scenario then:
£172,500 x 14.5% = £25,012.50

This results in a R&D tax credit saving of 33%. The business will carry forward a reduced £125,000 in losses.

Other factors that determine the value of a claim

The percentage saving generated by an R&D tax credit calculator can be hard to visualise. This is why you must accurately determine your client’s qualifying expenditure.

As talked about in our previous blogs, the value of a claim gets dictated by the number of qualifying projects and costs your client has. After putting your client’s details through an R&D tax credit calculator, the next step is to identify and include these extra details. This will give your client a complete picture of how much their R&D tax credit claim is worth.

However, it takes a lot of time and knowledge to accurately maximise a claim. This is because many individual costs have unique conditions attached to them. These caveats affect the percentage amount of the cost that can get included in a claim. As a result, totalling up your client’s qualifying expenditure can result in complications.

Get an accurate quote with made.simplr

Find out how much your client’s claim is worth with our R&D tax credit claim calculator.

That’s only the start of the software and expertise we offer to make claiming R&D tax credits easy. Our tax specialists guarantee to calculate your client’s claim with 100% accuracy while maximising its worth.

Book a demo with us today.

Often businesses are unaware that the projects they are working on qualify as R&D and thus allows them to claim R&D tax credits. They might be too preoccupied with the actual running of a business to investigate. They might not even be aware of the opportunity to claim R&D tax credits on their projects.

These are likely the reasons if your client is an SME. This is because leveling up and expanding a business requires constant attention. The work required at this developmental stage is also draining on time and resources. Whatever the reason though, these are the types of projects that are most likely to qualify as R&D.

It’s therefore especially important for SMEs to know what projects they can claim for, as they will benefit the most from the financial boons.

Your client is missing out

The scope of work that is R&D is vast and ever-expanding. In recent times, the Covid-19 pandemic has forced companies to innovate.The global pandemic has led to more employees working from home, budget cuts, and companies having to re-think business functions and processes. This has resulted in more and more businesses exploring technological spheres and looking to software development. As such, it’s very likely your client’s work will qualify for R&D tax credits.

The following broad project areas are ones that qualify for R&D tax credits:

• Adaptation of standard technology for niche uses.
• Development of new systems and processes.
• Improving the performance, efficiency and/or capacity of existing systems and processes.
• Designing and producing technically improved products.
• Packaging solutions (improving product shelf life for instance).

As discussed on our previous blog about qualifying R&D expenditures, the claimable costs within each project are mostly made up of general running costs. As a result, there is always a large amount of expenditure that is claimable within each project. Your client could therefore be missing out on financial benefits if they don’t identify all their qualifying R&D projects.

What qualifies a project as R&D

HMRC states on the UK government website, “The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science – like economics – or a theoretical field – such as pure maths. The project must relate to your company’s trade – either an existing one or one that you intend to start up based on the results of the R&D”.

However, using this definition can still be unclear. To break it down, your client should consider if they can answer the following four questions. This will help them figure out if a project qualifies for R&D tax credits. If the project achieves any of the following, it can qualify as R&D.

1. Does the project overcome uncertainty?

Uncertainty exists when an expert in the relevant field doesn’t know how something gets done, or if it is even possible. All available evidence should be on hand when deciding if there is uncertainty. It will help to get experts from within the company to review whether there was uncertainty or not. It is also possible to enlist the judgement of external experts. However, those that have worked on the project themselves will be most knowledgeable.

In overcoming this uncertainty, your client’s project will be on the frontline of technology within the field. Furthermore, the existence of uncertainty shows your client’s company has forged wholly original ideas and methods in the project.

2. Has it sought a scientific or technological advance?

The purpose of the project must be to benefit the field as a whole, not only your client’s business. In other words, every business within your client’s industry should be able to utilise the advancement their project will result in. For example, developments in food technology resulting in vegan alternatives that are easier to produce. This will lead to lower production costs, allowing food companies to reduce prices for consumers.

What if a service, product or process gets developed by another company? It can still be an advance even if it is not publicly available or known about.

3. Can your project show research, testing and analysis have taken place?

This is the equivalent of showing your working in a math question. Your client should be able to prove their project has undergone changes and overcome obstacles. The trial and error of researching, testing and analysing shows the difficulty of the work. It also justifies the importance of the project.

This is an essential aspect of the technical narrative, which is a crucial part of the R&D tax credit application. Therefore, it’s worth considering at an early stage if your client has the necessary project data to support their claim. Detailing the inner workings of the project will also help show how your client overcame the uncertainty in their project.

4. Could another professional in the field conduct this work?

The answer here should be no, as it shows your client’s advance is covering new ground. Keep in mind your client will have their own professionals working on the project. They will be able to explain the difficulties and uncertainties they face. Otherwise, finding previous unsuccessful attempts at finding a solution will provide an answer.

Unsuccessful projects or projects currently in progress can still qualify for R&D tax credit claims, so don’t dismiss these out of hand.

Get expert help with made.simplr

Using eligibility calculator software and enlisting the help of R&D tax specialists is a surefire way to ensure your client identifies all their R&D qualifying projects. made.simplr provides both!

Our R&D tax credit software was developed by experts with intimate knowledge of what qualifies as R&D projects. With it, your client is able to reliably and quickly identify the projects they can claim for. For accountants, our claims management and Xero integration features enable you to complete work for your client efficiently, and on time.

Book a demo today and find out how much you could be saving your client.

When accountants and their clients start looking into claiming R&D tax credits, they are often struck by the complexity of the application process. Usually, they get faced with the daunting prospect of completing many tasks. Most of these involve detailed research and reports to boot.

Some of this is unavoidable due to the amount of information HMRC requires for R&D tax credit claim applications. Yet, we’re here to tell you that it doesn’t have to be so labour intensive. In fact, with these six simple steps you will find applying for R&D tax credits easy.

Applying for R&D tax credit

All applications for R&D tax credit go to HMRC (Her Majesty’s Revenue and Customs) – the UK’s authority on customs and payments. Their primary function is to collect taxes and fund public services and provide for those in need. They also aim to prevent dishonest individuals from cheating the system. This is why the application process for R&D tax credit is so thorough.

R&D tax credits are able to be claimed up to two years after the relevant accounting period, with a maximum of 10 different R&D projects per application. If you wish to claim for more than ten, send an email to: RD.IncentivesReliefs@hmrc.gov.uk.

You should not rush applications for R&D tax credit. This is because an unsuccessful application can result in HMRC investigating the applying business. Inspectors for HMRC deal with a large amount of applications each year. As such, it’s important to compile your application in an easy to understand way, whilst also being accurate and informative. Avoid jargon and focus on being clear and concise in your delivery of information.

The steps to a successful R&D tax credit application

We know the process seems complicated at first. At made.simplr we’ve condensed the steps to make applying for R&D tax credit as straightforward as possible.

As the accountant for the business submitting the R&D tax credit application, you’ll be the one doing most of the heavy lifting. The following bullet points outline the steps you will face when applying for R&D tax credit:

Step 1 – decide on the projects you are claiming for: The first thing you and your client must do is identify which R&D projects and costs you’re eligible to claim for. HMRC needs to know the exact projects and costs, as well as how they meet HMRC guidelines and R&D definitions. This should involve all the company’s technical experts, as well as finance staff and R&D representatives. Getting expert advice in this area can save your client’s company valuable time and help avoid an investigation by HMRC.

Step 2 – choose the scheme that will work for the company: The two choices your client has is between the Research and Development Expenditure Credit (RDEC) scheme and the one for SMEs. The scheme that a business applies to will determine the amount of R&D tax credit they will receive. The SME scheme allows SMEs to claim back 33% of their costs. This compares to 13% for companies applying under the RDEC.

Step 3 – write the technical report: This forms the meat and potatoes of an R&D tax credit application. Here the company should describe in detail why each project was undertaken. The report should thus explain the problems the R&D project intends to solve and how it is going about it. This includes the specific work undertaken, staffing information and what advancements were made. It should also prove that the challenges solved by the project could not be solved by field professionals.

Related: R&D tax credits explained

Step 4 – create a costing schedule: This will collate all the various costs across all the projects you intend to claim. Accurate totaling of your qualifying expenditure is very important. This is to ensure the application will maximise the benefit for your business. However, there are many nuances associated with qualifying costs. This means getting expert help with costing schedules is highly advised. Again, you can learn about the details of these costs in our other blog.

Step 5 – submit the claim: Once you have compiled the above documents they have to fill out the CT600. This requires inputting financial calculations into the right boxes. While this seems straightforward, it does allow many opportunities for human error. Some companies can eliminate this possibility through modern technology. At made.simplr for example, we offer software services to input the financial data for you. With all these documents, along with the company tax return and the statutory accounts, you’re ready to submit the application!

Step 6 – HMRC processes and reviews the claim: HMRC aims for this to take between 4-6 weeks to complete this process. After which time they will provide your business with a cheque to cover any R&D expenditure. It’s important to check that the amount received adds up to the expected amount. This will be a combination of the various percentages of the R&D costs identified in the application.

Book a demo with us today & see for yourself how easy it is!

If you choose to come on board with us we’ll help you through each of these steps, guaranteeing the claims process to be a smooth one. Our experts are on hand to help at every stage, which, as discussed, can be crucial. They’ll take care of any questions you or your company may have on confusing areas such as qualifying costs. At the same time they’ll save you time when it comes to completing the written tasks of the application. What is more, our experts’ advice will enable your application to maximise its tax credit reimbursements. Thus giving your client the greatest value for money possible.

Our service also includes automated claims generation technology, allowing you to progress through the above steps seamlessly. This features user-friendly reports and analytics to compile your necessary data easily and without error. What is more, once an application gets sent, our R&D tax credit software can organise and track claims.

Take the weight of an R&D tax credit application off your shoulders and get in touch!

As discussed previously, the sort of claims that typically make up R&D tax credit claims are dictated by HMRC. These include ‘creative and systematic work undertaken in order to increase the stock of knowledge’. Going a step further and identifying the expenses within each project is very important. This is because it will help determine the eligibility of your business, as well as how much you can claim on a project.

Furthermore, applying for R&D tax credit using expenses which won’t qualify is wasted effort. This is why we’re here to tell you which costs will qualify for R&D tax credit.

The qualification process

Whether you qualify for R&D tax credit or not is also the decision of HMRC. Regardless of the sector or field, any business contributing to innovation can qualify for R&D tax credits. HMRC requires a detailed application for R&D tax credit, featuring a report of the work that has occurred. The first step in this application is identifying the projects your client wishes to claim.

It’s therefore important to identify the eligibility of the projects you’re planning to claim. This goes hand -n-hand with a focus on the costs within those projects.

If you’re curious about the general eligibility of your business, we’ll be covering this topic in depth in our next blog post. In the meantime, you can learn more about the claims process here.

Common business expenses that qualify for R&D tax credit

R&D tax credit claims are primarily made up by the day-to-day operational costs of the business. This is because some of the regular business assets are always set aside for R&D projects. The following revenue expenditure will likely be present in all R&D projects that companies undertake:

• Staff costs: Any salaries of staff involved with the R&D project are claimable. These costs can include employer pension fund contributions, bonuses and Class 1 National Insurance contributions. *Reimbursed costs also count so long as they are paid by staff first. Travel costs are a great example for this, although they must be in relation to the qualifying R&D activities.
• Consumables: This concerns items that get used up during the R&D process, such as physical materials and hardware. Also included are utilities like power, water and fuel. This will only apply if they get used directly in R&D. HMRC provides guidance on calculating what proportion of consumables are used in R&D projects.
• Software: The cost of any software used in the R&D project can be claimed. It can be the same software used by the business day-to-day, so long as an appropriate proportion of the cost gets included.
• Prototypes: Creating a prototype is a great way to qualify for R&D tax credit in the first place. The cost of developing a prototype can therefore be claimed, including creating and designing it.

More expenses

The list goes on!

• Externally provided workers: Costs paid to third party workers involved in the project, i.e. not on your payroll. Common examples include Staffing Agencies and Personal Service Companies. In most cases a claim of up to 65% can be made for payments made to an external staff provider.
• Subcontractors: These are usually experts in their field hired directly to provide services relating to the R&D project. They are usually paid directly through invoices due to their autonomous nature. Again, 65% of payments in this area can be claimed. On the other hand, if the subcontractor belongs to a connected party (parent company or subsidiary) then you can qualify for 100% of the expenditure.
• Research contributions: Payments made to third party organisations for research purposes can be claimed as a R&D tax credit expense The research conducted must be relevant to the broad field or scientific pursuit of the business. Examples of qualifying groups are scientific research groups and charities. While the organisations usually need to be UK based, HMRC specifies some overseas bodies which qualify. Unfortunately research contributions are reserved for larger companies.
• Clinical trial volunteer costs: Clinical trials are a huge part of pharmaceutical R&D. These costs are not covered by the other categories discussed previously though. Your client may be able to claim for costs associated with attracting volunteers, as well as paying for them. HMRC has guidelines relating to claiming these costs.

Common mistakes to watch out for

Most of the time, capital expenditure will not be eligible within R&D tax credit claims. This includes expenses on fixed assets such as land and buildings.

Additionally, many of the costs mentioned above have caveats to look out for. Most of these concern ensuring that the costs are directly involved in the R&D project. Ultimately, this will determine the eligibility of the claim itself.

A prototype must be designed to resolve a scientific or technical uncertainty to qualify as an R&D tax credit expense A prototype intended for commercial purposes will not qualify. Even a prototype which involves R&D in its development will not qualify if it is later sold to a customer. The cost of the whole build will be lost. HMRC takes the stance that there is no longer any technological uncertainty if a company is willing to sell to a customer.

Still unsure? made.simplr can check the eligibility of your costs for you

Calculating the eligibility of all your clients’ project costs is time consuming and complicated. That’s why our experts are available to do the heavy lifting for your client. Most importantly, they will ensure each of their projects’ costs are covered within their R&D tax credit claims. This is so the benefit to your client’s business is maximised to its fullest.

Our software simplifies the application process to make inputting project costs as painless as possible. We guarantee a service that will save you and your client time, whilst also ensuring your R&D tax credit claim doesn’t spare any expense.

Don’t hesitate in contacting us today for a demo.

In the digital age it’s possible to find online services for all your business needs, with R&D tax credits being no exception. In 2017, the first online R&D tax credit portal software was developed and set up in the UK. Since then, many businesses have begun offering their own R&D tax credit software and nowadays, there’s a veritable smorgasbord of online software to choose from.

So why should you, an accountant with small to medium businesses as clients, jump on the R&D tax credit software train?

What is an online R&D tax credit claim portal?

Essentially, an online R&D tax credit portal is software that you download to your desktop that submits your R&D tax credit claim for you. While each portal will differ based on the provider, each is designed to do the same thing – to maximise the claim of their R&D tax credit.

Most online interfaces will have you enter details of your business, allowing the software to calculate the best course of action. For R&D tax credit this will calculate your eligibility, as well as maximise the possible claims.

Although it’s not all automated. The online portal will put you in touch with qualified tax specialists at every stage of the process. They will review your application and be on hand to answer any questions.

Benefits of using online R&D tax credit portal software

In short, using online R&D tax credit portal software gives all the benefits of a regular consultancy while streamlining the process and saving money. Most businesses claiming R&D tax credit will be on the small side. As such, they might not have the resources to research how to claim. On top of this, the HMRC definition of R&D can feel overwhelming to break down without expert help. This is where online portals come in – to make the R&D tax credit claim process simpler. There are many pros to using an online portal for R&D tax credit claims, such as:

• Saves money: Most R&D tax credit consultancies will charge based on a percentage of the client’s corporation tax savings. For SMEs this can often be a sizable amount of their investment budget. Many small businesses are put off from exploring R&D tax credits as a result. Online software solves this problem by offering comparatively low sign up fees.
• Saves time: Filing via an online portal will automate the claim, making it a much more efficient process. And if you do run into any snags, experts are on hand to assist. Plus, it will free up your resources to focus on the very R&D the business is aiming to claim for!
• Ensures your claim meets HMRC guidelines: HMRC has a set of guidelines for R&D claims that must be met. Online portals ensure this happens, as they are developed by established specialists. This is important as an incorrect claim can cause HMRC to investigate the company’s activity. Recent research by YouGov shows that HMRC are scrutinising R&D tax credit claims from IT businesses. It also shows that 1 in 5 businesses claiming R&D tax credit were concerned about an HMRC inquiry. This should be much higher. An online portal will take care of the possibility of an inquiry, making it one less thing to worry about.
• Protects your client: In recent times there have been reports of a number of unscrupulous companies posing as R&D tax credit experts. These so-called ‘experts’ that exaggerate a claim could pose a huge risk of your client losing money, as well as facing an investigation from HMRC. R&D tax credit software secures your client’s business data by inputting into a specially designed system. There’s no need to share their confidential information to external parties.

How to find the one for you

When browsing for an online R&D tax credit portal, it’s important to identify the quality of service you want. There’s no point finding out you’re not eligible for a claim towards the end of the process, for example. Here are some indicators of high quality online portals:

• Low cost: As mentioned above, this is one of the calling cards of online R&D tax credit portal software that puts the service above consultancies. Review a number of online portals and their respective subscription fees and compare them according to the features they offer. Many will also only charge once the claim has been accepted by HMRC. 
• Integration with accounting systems: It’s a reality of modern business for companies to use accounting systems. As such, integration with systems such as Xero is a big plus. Integration removes the chance for errors in data entry to occur, which could compromise the claim. The risk of human error is something that can’t be eliminated during traditional consultancies.
• Quality advisors: The advisors you access through the software should be trained and experienced experts. This is key as it will dictate the overall quality of guidance you receive. Information on a portal’s advisors can usually be checked via their website. Software such as made.simplr’s will also offer you a range of experts as opposed to just one.
• Communication: A good online R&D tax credit portal will have strong channels of communication between the claimant and it’s experts. As well as consistency, this communication should be across multiple platforms. Live online chat, email and phone support should all be available through the software. This ensures the client can progress their claim at their own pace while avoiding delays.
• Cloud technology: Building on this, a quality R&D tax credit portal should utilise cloud technology. This makes it accessible 24/7 from any internet capable device. No maintenance or physical servers are required. This ensures round-the-clock access to an expert, where a consultancy has to fit within the schedule of the expert in question. 

Look no further than made.simplr

It goes without saying that all the above aspects can be found within made.simplr’s R&D tax credit software. In particular, if you’re an accountant looking to do what’s best for your client, this is the service for you. You’ll be able to manage and organise your claims with unprecedented ease. This is enabled by mobile device access, along with easy-to-use reports and analytics. With an intuitive design, we guarantee it’ll take less than an hour to get your client onboard.

Our specialist expertise comes from 15 years working in government funding, with 10 years focused on processing R&D tax credit claims.

We pride ourselves on delivering a quality user experience most of all. Don’t hesitate in contacting us today for a demo.

A majority of businesses have had to make big changes to the way they operate over the past year during the Covid-19 pandemic, with many turning to government grants and subsidies for much-needed financial support. As you might imagine, changes to your client’s business model as well as receiving support as a result of Covid-19 can impact their R&D tax credit claim. This manifests in relation to claims eligibility as well as the amount that you can claim.

Appropriately, it has been businesses most invested in R&D that have had to turn to government funding to stay afloat in recent times. We’re here to tell you what to look out for so you and your client don’t get caught out and more importantly, how you can maximise your claim.

What support has the government been offering for Covid-19-impacted businesses?

There are many ways for businesses to access Covid funding in the UK. In April 2021, Grantfinder reported that more than £330Bn in guarantees and loans were confirmed to be available by the government. Examples include the Bounce Back Loan (BBL), Job Support Scheme (JSS), Coronavirus Job Retention Scheme (CJRS) and Coronavirus Business Interruption Loan Scheme (CBILS).

• Coronavirus Job Retention Scheme: Introduced in March, the CJRS protects employees’ jobs by funding ‘furlough’ payments. Grant payments can be claimed to cover up to 80% of workers’ monthly wages while they are on a leave of absence.
• Coronavirus Business Interruption Loan Scheme: This scheme allows SMEs access to a government loan of up to £5m. As an added bonus, any and all interest payments are also covered by the government. This includes lender associated payments for up to twelve months as an initial period. The scheme is delivered through the British Business Bank.
• Bounce Back Loans: Made available on 4th of May 2020, Bounce Back Loans are also available to SMEs. These guarantee access of up to £50,000 from the government.

For larger businesses, there’s the Bank of England’s Covid Corporate Financing Facility. As long as the business can prove they were performing well before the pandemic, the Bank of England will buy short-term corporate debt, known as commercial paper. This allows businesses experiencing disrupted cash flow to raise working capital.

Coronavirus (COVID-19): Business support – GOV.UK (www.gov.uk)

Does receiving Covid-19 grants/subsidies compromise securing R&D tax credits?

Well, the answer is – it depends. A company might not qualify for R&D tax credit if they have received grants or subsidies, especially if it’s for the project they are claiming. However, there are ways to maximise and optimise your client’s claims if you are fully informed and know what to look out for. This will help your client to achieve the best of both worlds.

• Coronavirus Job Retention Scheme: As alluded to above, these workers mustn’t be working. To qualify for R&D tax credits, all furloughed employees must have ceased work completely. This means HMRC can guarantee these workers are not contributing to R&D projects. As long as you follow this condition, any CJRS support will not affect R&D tax credit claims. There’s nothing to worry about if the business has furloughed employees but hasn’t received any CJRS. HMRC will consider that they aren’t involved in the relevant R&D.
• Coronavirus Business Interruption Loan Scheme: CBILS is classified as notified state aid, i.e. aid which has been approved by the European Commission. This means CIBLs will not affect a company’s R&D claims so long as the money is not spent on an area related to the R&D claim. If it is, then the projects won’t qualify under schemes designed for SMEs. The total loan money used in the qualifying expenditure will then have to be deducted from the claim. However, the business could still claim under the government’s RDEC scheme.
• Bounce Back Loans: While also classified as state aid, Bounce Back Loans are also ‘de minimis’ forms of aid. This means they can affect future R&D tax credit claims, even though businesses use them for all manner of financial support. As these loans are often small in size, they do not have to be declared to the European Commission.
• Aid from the Corporate Financing Facility: This support won’t conflict with R&D tax credit claims. This is because it reduces outstanding business debt as opposed to an injection of money from an outside source. It is therefore an aspect that sets this Covid funding apart from traditional loans.

These last two examples show the complexities that can arise from receiving Covid funding. Every company’s situation will differ, so getting professional guidance is advised.

What to do with this information

Businesses across the board are still recovering from Covid-19. It’s going to be very likely that your clients will have accessed one or more of these support schemes. First is to dispel any stigma in getting financial help. Second is to create an open conversation about their finances with no details spared. How they have used the financial support is something to bear in mind when looking at their books, particularly when considering where the loan money is being spent. This is important because R&D tax credits are themselves a form of support for businesses now.

How can made.simplr help you?

As the name suggests, the main thing we can do for you in this area is provide clarity. If you’ve read this far you’ll see what government support can do for businesses during the pandemic. However, it has created complexity when it comes to applying for R&D tax credits for many reasons. Our experts are on hand to give you valuable, personalised advice.

Furthermore, our R&D tax credit software will maximise the claims your client can make. It considers which claims are compatible with which forms of Covid-19 business funding. Being designed for accountants makes for an easy-to-use interface too.

Contact us today for a no-obligation demo.

In 2000, to encourage scientific and technological innovation and growth, the government introduced the R&D Tax Credit Scheme which is available to companies across the United Kingdom. To understand exactly how R&D tax credits work, click here.

While submitting a research and development tax credit claim might seem time-consuming and complicated (made.simplr has the solution, but more on that later), it is worthwhile taking the time to explain to your clients why it’s so beneficial.

Firstly, you need to see if they are eligible for R&D credit. Chances are, if they have developed, improved, or even attempted to improve but failed, a new product, process, or service with the aim of benefitting the relevant industry as a whole, your client will be eligible.

See R&D tax credits explained – what are they? Is your client’s company eligible?

It’s important to reiterate that it’s not only pharmaceutical and technology companies performing science experiments in a laboratory that qualify for this benefit. All companies across all industries are eligible to apply, including small businesses and start-ups – even your own accounting firm(!) – as long as they meet the aforementioned criteria.

What are the benefits of R&D tax credits?

To put it broadly, R&D tax credits provide substantial financial advantages to businesses, ones that all companies would welcome, especially in these current financially difficult times.

R&D tax credits reduce the tax liability and inject cash back into the company for reinvestment into further research and development, job creation, future investor interest, and company advancement. The ultimate end result? Healthy industry competition and economic growth.

The cash amount or the tax liability you are set to receive depends on whether you are claiming via the SME scheme or the Research and Development Expenditure Credit (RDEC) scheme. According to HMRC, the relief SMEs can get is 230% on their qualifying R&D costs (calculated at 130% of their qualifying costs from their profit, as well as the standard 100% deduction, to make a total 230%). If they are making a loss, they can receive a cash credit. For larger companies claiming via the RDEC scheme, a taxable credit is available at 11% of qualifying R&D expenditure, and again, loss-making companies receive a cash credit, subject to certain restrictions.

Let’s break it down in detail. R&D tax credits can benefit your client in the following ways:

• By providing a lump sum of cash which will not only help with cash flow but can be reinvested to further your R&D efforts, hire new staff, or buy new equipment. Let’s face it, additional funds will always be most welcome.
• By offering a significant reduction in tax liabilities (230% on qualifying R&D costs for SMEs and 11% for larger companies).
• A possibility of job protection. For example, if the pandemic has resulted in one aspect of your business closing down, the affected staff can be used in research and development instead. Employees get to keep their jobs and you can claim for R&D tax credit. It’s a win-win.
• Any losses under either the SME or RDEC schemes may be carried forward to be set against future years.
• They provide a reliable form of business funding seeing as a business can make a claim each year.
• Attract potential investors, which will, in turn, mean more funding for the business.

Here’s an example using a fictitious company’s profit and loss:

SME worked example	Profit and Loss Account (£)	RDEC worked example	Profit and Loss Account (£)
Sales	1,000	Sales	1,000
Cost of sales	(500)	Cost of sales	(500)
Gross profit	500	Gross profit	500
R&D qualifying expenditure	(100)	R&D qualifying expenditure	(100)
Other expenses	(150)	11% RDEC on expenditure	11
Total operating costs	(250)	Other expenses	(150)
Net profit before tax	250	Total operating costs	(239)
		Net profit before tax	261
Tax due (see below)	24	Tax due at 20%	52.2
	Corporation Tax Computation (£)		Corporation Tax Computation (£)
Net profit before tax	250	Net profit before tax	261
Less R&D relief (130%)	(130)	Corporation Tax due at 20%	52.2
Adjusted profit before tax	120
Corporation Tax due at 20%	24
	Corporation Tax payable (£)		Tax payable (£)
		Corporation Tax due	52.2
		Less tax credit	(11)
Corporation Tax	24	Corporation Tax payable	41.20

Example courtesy of HMRC

How are the R&D tax credit benefits received?

HMRC aims to deal with 95% of payable tax credit claims within 28 days of receiving the claim. Naturally, this isn’t cast in stone and will depend on the complexities of the company and the claim, the volume of claims to be processed, and whether HMRC picks up any irregularities.

Even your accounting firm can benefit

As mentioned previously, the R&D tax credit benefit can apply to all industries, accounting practices included.

Information Communication Technology (ICT) moves at a rapid rate, with new hardware, software, and IT solutions being developed all the time. Has your company made any technological advances to adapt the way you do business?

• Have you installed new software to improve operations? Whether it’s to improve efficiency or communications, this is another possible eligible activity.
• Have you increased your cyber-security? In this fast-paced and ever-changing digital world, protecting your and your client’s data is more important than ever. Investing in a secure cyber security system could be regarded as an eligible R&D activity.
• How about moving your systems onto the cloud? Having all your services and technology available remotely is vital in remaining competitive and relevant in this work-from-home, digital age.

What is important to remember is that the new technology or product needs to represent an advancement in the field of ICT. But seeing as the industry moves at such a rapid rate, it is highly likely it will qualify for the tax benefit.

Why made.simplr? How can we help you?

At made.simplr we know how important a good relationship is between accountant and client. We want what is best for you and you want what is best for your client. The good news is we are the experts in R&D tax credit, and as a result have developed an automated software solution that has taken all the administrative headache out of the claims process. It is guaranteed to produce an optimised R&D tax credit claim with the best possible outcome for your client.

Contact us today for a no-obligation demo.

The R&D tax credit scheme was launched in 2000 in the UK to encourage innovation by incentivising businesses to invest in scientific and technological research and development. The reward? A substantial corporation tax deduction or cash payment from HMRC, depending on set criteria being met. The idea being to use this cash injection or tax relief to reinvest into further research and development and to grow your company and relevant industry.  The more that is invested in R&D, the higher the tax credit – and the cycle continues.

 The end goal – greater wealth creation in the UK economy. Which is a win-win for the government, the business owner, the labourer, and everyone in between.

Exactly how do R&D tax credits work?

 In a nutshell, companies developing new products or tools are often eligible for an R&D tax credit. Before you get too excited, HMRC do have stringent criteria as to what projects qualify for R&D Relief¹: 

Your client’s company will need evidence that their project;

• looked for an advancement in science and technology
• had to overcome uncertainty and tried to overcome this uncertainty
• could not be easily worked out by a professional in the field
• conducted the R&D in a systematic and thorough fashion

The above can apply to developing a new product, service or process, or enhance an existing one. And the beauty is that it’s not only limited to laboratories in the science and technology industry but available to all sectors. One caveat though, the product or advancements made must benefit the relevant industry as a whole, and not only your client’s business. 

The element of risk is an important one to consider too. Did your client know what the outcome was going to be? Is there an element of uncertainty or risk associated with the project? And has your client attempted to overcome that risk? And most importantly, do they have the necessary evidence? Your claim will very swiftly be kicked out if you lack the supporting documentation to prove the expenses associated with the relevant research and development.   

Is your client’s company eligible for R&D tax credit?

 If your client is eligible, they can reclaim up to 33% of their R&D costs! And if it’s their first claim, you can claim for the last two accounting periods.

The actual benefit they could receive depends on whether your client is a large or small company and whether it is profitable or made a loss. 

Small businesses (SME’s) can claim research and development tax credit if the company has²:

• less than 500 staff
• a turnover of under €100m or a balance sheet total under €86m

However, if their company has received any grants or subsidies for the particular project that is being claimed for, then they might not qualify.

 Larger companies (i.e. 500 staff or more, or more than €100 million turnover / €86 million in total assets), and SME’s whose projects have received funding, could qualify for the less lucrative but still highly beneficial Research and Development Expenditure Credit (RDEC) regime. Profit and loss-making projects benefit, in that if the company made a profit, the RDEC benefit reduces the corporation tax liability, and for loss-making companies, they receive a credit which can either be transferred to a cash pay-out or used in lieu of previous tax liabilities.

Your client’s company could claim via both schemes if applicable. For example, if they are an SME but one of the eligible projects has received a grant. Using both will maximise your client’s benefits.

Still not sure if your client qualifies?

Ask yourself the following questions: 

1. Has your client launched a new product or project recently which could advance the fields of science and technology? Or are they planning on launching one? (The benefit applies even if the product/project fails.)
2. Many companies have had to innovate or change direction to stay relevant, thanks to the current pandemic. Is your client one of them? This may include anything from new online tools to manage your business more effectively, to advances in telecommunications, to new product development.
3. Does your client develop patents, prototypes, or software? Again, these are all indications that your client could be eligible for the R&D tax credit.
4. Does your client employ engineers or scientists? Designing advancements on current systems, plotting new infrastructure, and experimentation are all R&D-qualifying criteria.
5. Does your client work within the following industries? Agriculture, Manufacturing, Oil and Gas, Engineering, Architecture, Construction, Software, Food and Beverage.

Below are some ‘real-world’ examples of potential R&D tax credit claims.

Your client:

• Is in the food and beverages industry and they are developing a new plant-based product
• Is attempting to enhance a current ventilation system to be more energy efficient for the air-conditioning industry
• Is enhancing their IT security systems
• Has developed a new communication model or method of content delivery
• Is a beer-brewer in the process of developing a new type of beer   

made.simplr can help with your client’s research and development tax credit claim

If you’re an accounting firm, you probably already know all this. And you’ll know that claiming for a research and development tax credit is in your best interest as well as your clients. It can help build and grow their company, and the economy as a whole. But we know the process can be time consuming, complicated and confusing. Did you know that there’s now an easier way to submit an R&D tax credit claim?  One that is fully automated, accurate, reliable, and easy to use.

 made.simplr is revolutionising the R&D tax credit claims process with their specialized R&D tax credit software especially for accountants. With our software, you can make sure your client receives the maximum benefits, whether it is a substantial tax relief or a lucrative tax credit. Contact us today for a no-obligation demo.

¹ Gov.uk, Claiming Research and Development tax reliefs

² Gov.uk, R&D tax relief for small and medium-sized enterprises

The latest figure from HM Revenue & Customs (HMRC) has revealed that more than 52,000 small and medium-sized businesses made research and development (R&D) tax credit claims in the 2018-19 tax year, but thousands more could benefit from this scheme.

Due to the two-year period for making R&D claims, the information provided by HMRC is always backdated, however, the latest data shows that many firms still may be missing out.

Approximately £6 billion of R&D tax credits were claimed during the 2018-19 tax year, with around half coming from the SME scheme.

This equates to a 19 per cent year-on-year increase, which indicates that many more firms are becoming aware of the opportunities on offer from the R&D tax relief, and yet estimates suggest that this scheme continues to be underutilised.

Additionally, the £6 billion total is a long way short of the UK Government’s new commitment of £22 billion in R&D tax relief by 2024-25.

This suggests that further education about the benefits of R&D relief is needed, as well as a simplification of the claims process, for which there is a consultation already underway. Alongside this, the Treasury is committed to supporting all eligible claims, with 95 per cent of claims now processed within 28 days of submission.

If SMEs are engaged in an eligible R&D project, they can claim additional relief equivalent to 130 per cent of qualifying expenditure, offering them a 230 per cent reduction in taxable profits. Firms with surplus tax losses can surrender these in favour of a repayable cash tax credit.

If you think you or a business you support might be eligible for a claim, but you need support to complete the claims process, our innovative, cloud-based software is here to help.

Made.Simplr can quickly and easily automate R&D tax credit claims, by pulling information from existing platforms to create a ready to submit report.

To find out more about our innovative solution, please arrange a demo with our team today.