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The latest R&D tax credit data from HM Revenue & Customs (HMRC) shows that the use of the tax relief increased by 17 per cent between 2016-17 and 2017-18.

In total, during the 2017-18 tax year (the latest complete data set available) the amount of support received by businesses via the R&D tax credit scheme was £5.1 billion – a 15 per cent increase on the previous year.

This helped to fund £36.5 billion of R&D expenditure during this period, which again was an increase of eight per cent from the previous year.

When looking at the regional breakdown of claims, most are still being made by business with a registered office in London, the South East or the East of England.

Of course, this may slightly skew the real regional split of funding as it is based on where businesses registered offices are located, rather than were the R&D took place.

The Manufacturing, Professional, Scientific and Technical, and Information and Communication sectors continued to have the greatest volume of claims, making up a total of 66 per cent of all relief.

While many claims continue to be made by R&D tax credit ‘veterans’, there were 15,750 first time applicants for R&D tax credits in 2017-18 – a further increase of 10 per cent on the previous year, which was largely driven by those using the SME scheme.

Although a complete data set for the 2018-19 tax year is not yet available, as of 30 June 2020, HMRC reports there had been 59,265 R&D tax credit claims, of which 88 per cent were for the SME scheme.

The data also shows that £5.3 billion of R&D tax relief support has been claimed for 2018-19, corresponding to £35.3 billion of R&D expenditure – a further increase in the tax relief claimed on previous years.

While it is positive to see more and more businesses utilising the support on offer, there are still thousands of businesses, both large and small, out there who are eligible to make a claim but haven’t.

This represents an excellent opportunity for accountancy firms to show off their skills and increase their revenue by utilising our effective cloud-based solution to automate the R&D tax credit claims process.

To arrange a demo with our team to look at the untapped potential of R&D tax credits, please contact our team. 

The last few months have seen businesses across the UK invest heavily in technology and innovation as they attempt to grapple with the challenges created during the Coronavirus crisis.

A sudden move to home working for many has meant that lots of workers have had to rely on technology to get the job done.

Nowhere has this been truer than in the accountancy profession. The sector has played an integral role in the economy, providing businesses and their owners with support, advice and information that has been critical in decision making.

In fact, their impact has been so great that they are now considered to be key workers by many of the UK’s SMEs, according to online accounting platform Xero.

A new study by Xero showed that nearly half of small business owners think that their accountant played a vital part in the survival of their venture during the pandemic.

A further 37 per cent said that their trusted accountant played a key role in helping them retain staff during the depths of lockdown.

As well as relying on their accountant’s services, the SMEs that participated in the study were also keen to highlight the importance of technology in keeping their business functioning – with 48 per cent saying cloud technology had helped them to work with their accountant.

As the pandemic, now enters a new phase, with the potential for new restrictions, many may be asking what role accountants, and the technology that helps power their support, have to play in the UK’s economic recovery?

It is clear that a key focus for many SMEs is access to funding and finance, which can not only help them to rebuild their businesses but create additional resilience against future crises.

One key source of funding in an age where many mainstream lenders are more risk-averse is via tax reliefs, allowances and grants.

There are a number of sources of substantial financial support out there for businesses, but barriers often stand in their way.

These barriers include, but are not limited to, a lack of knowledge, confidence, time and costs. For many SMEs investing in the services of an accountant to access these sources of income just may not be a possibility or they may not have an adviser with sufficient knowledge to offer assistance.

Once again this is where technology can come to the aid of accountants. For many smaller firms of accountants, hiring a specialist in R&D tax credits or capital allowances just isn’t cost-effective, so in some cases, firms feel the need to either turn clients away or outsource claims to larger practices.

At a time where every firm is looking to maintain revenues, impress clients and build resilience within their own practices this is not an effective approach.

Thankfully, due to the cloud-based innovations introduced by the likes of Xero, QuickBooks and FreeAgent many smaller innovators have sprung up who can provide apps or solutions that can assist with niche areas of accounting.

One such solution is our own Software as a Service, made.simplr. Developed by a team with years of experience helping businesses and smaller accountancy firms with R&D claims – helping to raise more than £30 million for SMEs – we have developed a solution that can quickly and easily produce HMRC R&D reports using automation and existing cloud platforms.

The benefits to accountants are obvious, as it takes away the need to outsource services, reduces costs and opens up new revenue streams.

While ours is an example of how technology is playing a role in the recovery and resilience of businesses, we are by no means alone. There are many other new innovations on the horizon that are designed to assist accountants and their clients.

Technology undoubtedly has an important role to play in the success, not only of the accountancy industry but the vast array of businesses they support and to whom they are considered key workers and trusted advisors.

In this new age of innovation, it is unfortunately those who do not adapt and implement technology that will suffer most. Some firms will have to realise that investing in new systems will not lead to the replacement of their jobs or create additional burdens, but rather it will empower them to provide more advice to clients by freeing their time.

What’s more Xero’s study shows that many businesses have come to expect an innovative, technology-led approach from their advisers and in failing to embrace this they may cut themselves out of the market.

With a growing reliance on technology within accountancy practices and a desire in many firms to innovate it is important that partners and directors explore the possibilities that are out there.

Our team is already supporting businesses with their digital transformation journey and is ready to assist more firms during this challenging period. To find out more about our unique R&D tax credit solution, please book a demo!

Ken Skates, the Economy Minister, has called on the Government to increase their investment into other regions across the UK to help them reach their full potential through a fair share of Research and Development (R&D) and innovation funding.

On Wednesday 7 October 2020, the Minister called for this change during a speech at a Foundation for Science and Technology event in regards to the UK R&D Roadmap – “Levelling Up”.

According to the Economy Minister, R&D funding prioritises regions such as the East of England, London and the South East of England. Despite making up only 37 per cent of the population, these regions account for 52 per cent of the UK’s R&D funding.

He added that he wants to see other regions given the same chance to reach their fullest potential, as “the future prosperity and stability of the UK depends on all parts of the union being able to contribute to an innovative and productive economy.

Ken Skates, the Economy Minister, said: “Sadly, the UK remains the most regionally unbalanced economy in Western Europe. This disparity is something the UK Government must correct and rethink quickly.

“I welcome moves towards a more place-based approach to R&D funding but would stress again that this must deliver an equitable balance across the UK’s nations and regions.”

With 20-year long funding from the European Union (EU) set to come to an end when the UK leaves the EU at the end of the Brexit transition period, Skates is now reiterating that the Government must deliver on their promise to ensure the future financial prosperity of all regions of the UK.

To find out how Made.Simplr – our cloud-based software as a service solution – can aid you and your clients with their claims, please contact us to arrange a demo today.

More than 9.6 million people in the UK have been furloughed using the Coronavirus Job Retention Scheme (CJRS) – many of these at companies that rely on R&D tax credits to power their innovation.

A substantial part of any R&D tax claim is likely to be the staffing costs for directors or employees directly and actively engaged in relevant research and development (R&D).

HM Revenue & Customs (HMRC) has provided clarity now on how staffing costs will qualify for tax relief if staff normally engaged in R&D activities have been furloughed as a result of the Coronavirus pandemic.

A key principle of the early furlough scheme was that all work for the employees affected must stop. Obviously, HMRC considers that those employees cannot be regarded as being directly or actively engaged in relevant R&D during those times – especially as suggesting that they did work could lead to questions about the grants received.

This also applies equally to any ‘top-up’ from the company itself to boost the earnings of those furloughed and in receipt of only 80 per cent of their normal wage.

However, from 1 July 2020 until the scheme ends on 31 October 2020, it has been possible for employees to return to work part-time under the CJRS.

This flexible arrangement has allowed staff to be paid by their employer for the time they do work and still receive financial support for the time they are not at work via the CJRS because they are furloughed. HMRC has confirmed that the hours where the employee is not furloughed do count as qualifying expenditure.

Of course, in some cases, staff have been furloughed or put on short time working arrangements and not been provided with a grant under the CJRS.

In these cases, costs can only be claimed if some qualifying R&D activity has been undertaken. Business must account for the appropriate proportion of work under the R&D tax legislation.

Businesses must also consider holiday and sick pay during furlough. HMRC says that these are a necessary cost of employees undertaking R&D work and is, part of the cost of their working time.

Therefore, HMRC will accept a fair and reasonable apportionment when calculating the element of subsidised staffing costs for holiday and sick pay.

Payments during gardening leave, payments in lieu of notice or redundancy will not qualify for relief under the R&D tax relief schemes. However, bonuses and one-off payments can be included in staffing costs to the extent that they meet the attribution rules.

If you are having trouble identifying or calculating qualifying expenditure then made.Simplr can help. To find out more about this innovative, technology-driven approach to R&D tax relief, book a demo today!

A “shared vision” of the United States of America and the United Kingdom of Great Britain and Northern Ireland, for driving technological breakthroughs in artificial intelligence (AI) has been published on 25 September 2020.

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In times of crisis, where cash flow is constrained, businesses will be keen to find new ways of bringing funding into their company.

Unfortunately, with many traditional lenders restricting borrowing and the Government reducing the amount of financial support, business leaders may not know where to turn next.

R&D tax credits offer a fantastic opportunity to a wide range of businesses to tap into either the cash they need via a tax credit or benefit from a substantial tax saving.

Of course, most businesses may not be willing to wait for their year-end and may need urgent access to funding now.

Where a business’s year-end has already passed it may just be a simple proposition of obtaining their year-end information on qualifying R&D expenditure so that a claim can be calculated for the potential tax benefit from the previous year.

In these circumstances, with the right advice and a quick response from HM Revenue & Customs (HMRC), claims can be processed and the benefits received within a short period.

Where a company is only part of the way through their current financial year, matters are a little more complicated.

Where their year-end is only a few months or weeks away, they should prepare the records required to make a claim, including details of qualifying expenditure for projects they have undertaken during the financial year and submit this information to HMRC at the earliest opportunity.

Where a business’s year-end is six months or more away and they are in desperate need of funding they could also seek a change of financial year-end. This is quite an involved procedure, which may affect other aspects of their funding, but it could drastically accelerate a claim for expenditure made in the accounting period.

Where an existing claim is already with HMRC it is not possible to speed up a claim and it will be processed at the speed determined by the HMRC officers dealing with the matter.

Of course, one of the most effective ways of speeding up the preparation of a claim is by using automation via the cloud to collate the information required to prepare an HMRC-ready claim.

We are currently developing a new payments system which may help to accelerate funding further by allowing companies to get their credit before HMRC pays. We hope to bring you more details of this soon.

To find out how made.simplr – our cloud-based software as a service solution – can aid you and your clients with their claims, please contact us to arrange a demo today.

Judges at this year’s Cloud Excellence Awards have selected innovative cloud accounting solution made.simplr for the Best Cloud Finance Solution shortlist.

Developed by the R&D specialists behind Kapitalise, which has helped businesses to access more than £30 million of R&D tax credits, Made.Simplr helps businesses and accountancy firms automate the process of applying for R&D tax credits using the latest cloud technology.

Already shortlisted for several awards this year and a recipient of two government-backed grants from Innovate UK, Made.Simplr is an elegant solution which helps to make the R&D claims process easier by producing HMRC ready reports – helping the accountancy firms it works with to increase their revenue and the number of claims they can support.

The team behind Made.Simplr has worked hard in recent months to assist businesses, who have been able to use this cloud solution to work remotely to deliver new services to clients.

The Cloud Excellence Awards are held annually by leading tech publication, Computing. It recognises the very best of the UK’s cloud industry, from the most innovative and compelling products and vendors, through to the top cases from end-users.

Dr Sarah Malter, Managing Director at Made.Simplr, said: “To be considered amongst the UK’s leading cloud businesses is a real honour and a fantastic achievement for our team.

“It demonstrates the value that the tech industry sees in our solution and highlights the growing importance of cloud computing, especially after it has been so widely employed during the ongoing COVID-19 crisis.”

The team at Made.Simplr will find out whether they have won at an online ceremony due to be held on 5 November 2020.

To find out more about Made.Simplr’s cloud accounting solution, please visit www.madesimplr.com

Leading business groups have urged the Government to introduce digital tools tax relief to support small and medium-sized enterprises (SMEs).

Experts including the Institute of Directors (IoD) and Be the Business have stated that the coronavirus pandemic has highlighted the importance for small businesses to adopt further use of digital technology and that this should be incentivised to encourage greater uptake.

Research from leading accounting software firms has found that the extent to which SMEs can rebuild and recover from the pandemic relies significantly on ‘how digitally enabled they are’.

Digital apps have seen a noticeable increase in adoption in recent months, with small businesses that used apps to manage their business before the introduction of lockdown measures seeing a 12 per cent smaller decline in revenue, according to a recent report.

Tom Gibson, Head of Digital and Technology adoption at Be the Business, said: “This is a pivotal moment for UK business, and having a time-bound incentive to encourage SMEs to adopt the right kind of tech makes sense.

“However, tax relief or grants won’t work in isolation. Our research has found major barriers to SMEs successfully adopting tech, and these need to be overcome in parallel with financial incentives.”

The business groups have also highlighted the use of Research and Development (R&D) tax credits, stating that a widening of the criteria to include any form of digital investment could encourage more investment in digital tools to support businesses.

To find out how Made.Simplr can help your business with an innovative and forward-thinking approach to R&D, contact our expert team today.

The Government is currently consulting on proposals to tackle tax relief abuse through the research and development (R&D) tax credit scheme.

However, the Institute of Chartered Accountants in England and Wales (ICAEW) has raised concerns that some of the changes proposed could prevent genuine businesses from accessing R&D support.

Through its consultation – Preventing abuse of the R&D tax relief for SMEs: second consultation – the Government hopes to reduce the potential for fraudulent claims for R&D relief, in particular those individuals who may be exploiting the tax repayment available under the SME scheme.

To achieve this, the proposals suggest limiting claims for a payable R&D credit by reference to the claimant’s pay as you earn (PAYE) liabilities.

The ICAEW has raised several points of concern about these proposals and fear that they could create an additional burden on compliant businesses.

HMRC has stated that claims below £20,000 will not be affected by the cap, which should mean that start-up ventures with minimal PAYE liabilities are not significantly affected by the new measures.

HMRC has also proposed that businesses making genuine use of the tax credit scheme for R&D expenditure can make an uncapped claim if they provide evidence around the management of intellectual property (IP) to support the claim.

This consultation has been running alongside HMRC’s other proposals which look at the scope of R&D expenditure in relation to cloud services.

This additional consultation closes on 13 October. We will be providing our thoughts to the Government on these proposals and will aim to keep you updated, as and when new details are confirmed.

A taskforce has been set up to examine the future of the UK’s Research and Development (R&D) sector and will be led by Professor Sir Peter Gregson, Cranfield University’s Chief Executive and Vice-Chancellor to establish the relationship between businesses and universities in relation to R&D.

The collaboration of businesses and universities are seen as key for advancing UK Research and Development (R&D) and assisting the country towards economic recovery.

In 2018 alone, the total expenditure on the UK R&D was £37.1 billion, which has regularly increased from £18.5 billion since 1981 and equates to £558 per head. Additionally, R&D tax credits contribute up to £8.2 billion to the UK economy.

According to data, 85 per cent of R&D claims are from Small and Medium Enterprises (SMEs). The average claim of SMEs being £53, 876.

Professor Sir Peter Gregson, Chief Executive and Vice-Chancellor at Cranfield University said: “At Cranfield, we pride ourselves on our deep and meaningful partnerships with businesses. Those partnerships are a critical part of our distinctive specialist postgraduate education and research offerings in technology and management.

“I’m delighted to be appointed to this taskforce with such distinguished leading figures in UK business and academia.

“Throughout my career, I have championed the power of universities, business and government coming together to drive innovation and I’m looking forward to the work this taskforce will do in helping the nation realise its vital R & D ambitions.”

Formed by the National Centre of Universities and Businesses (NCUB), this taskforce will consist of members such as Lord Karan Bilimoria, President of CBI; Sir Ian Davies, Chairman of Rolls-Royce; Jan Du Plessis, Chairman of BT; and Professor Louise Richardson, Vice-Chancellor of the University of Oxford.

It will focus on ways to continue the partnership of universities and businesses, whilst coinciding with the long-term and important ambitions of the UK Government’s R&D Roadmap – at the request of Research England.

To find out more about how Made.Simplr can help your business with its forward-thinking approach to R&D, book a demo today!