Ask most Accountants when software really started to take hold of their industry and they  will cite Making Tax Digital (MTD) as the catalyst.

However, software has been a growing part of the day to day function of Accountancy and Bookkeeping Firms for many years, be it Firm Management, CRM systems, Tax Filing software and even, dare I say it, good old Microsoft Excel!

Accountants play a very important role within the Business world. They enable their clients to create jobs, wealth, stability, and opportunities for all.

Is it then any wonder that technology, and software now play such an important and integral role in the day to day running of Accountancy firms? The answer is a resounding no.

How has Software and Technology changed the Landscape of the Accountancy Industry?

For some, the new GDPR legislation that came into effect in the UK in May 2018, led them to streamline and embrace technology. No longer was it acceptable to have papers just lying around an office or filing cabinets bursting. GDPR pushed Client data management into software, on the cloud, or other secure digital forms of record storage.

Accounting software has allowed Clients of Accountants to gain further control of their business finances. They can now view invoices, payments, and other financial transactions at a click of a button or a swipe of a thumb on their smart device. Online banking records that feed information into accounting software mean that the business owner and their accountant can quickly and easily access and view all the relevant data. Companies such as Xero, Quickbooks, Dext as well as banking Apps such as Tide now give users more visibility over their financial records than ever before.

The change hasn’t come without it’s deterrers, however. Some accountants have been reluctant to adopt new technologies.

For one, Accountancy Firms are built on trust and service. Deliver poor service and you will soon lose clients. This is true of any business! Accountants are very proud of their reputation. They are upholding, honorable members of the community they serve. It takes many, many years to become a fully qualified Accountant; even more to become Chartered. Then there are the years of experience required to specialise; be it within the field of VAT, Personal Tax, or Corporate Taxes.

Many will freely admit to being time constrained. The demands from Clients, HMRC deadlines and staffing issues can all add up to a poor work-life balance for Senior Partners and Managers. We have recently seen Big 4 firms taking proactive steps to move staff away from working weeks that have regularly exceeded 60 hours.

Software in the Accountancy Industry

Another point to consider is the Return on Investment (ROI) for any given Firm. Will a new concept, or way of working deliver increased revenue streams for them? The average profit margin for a UK Accountancy firm is healthy; with very few ever going out of business. 

I am lucky enough to spend my working days speaking with many, many Accountants. Most will gleefully tell me how several clients are second, third or even fourth generation.

The two biggest pain points that most of them highlight are growth strategies and recruitment.

So, this leads me to trying to find out how software has, and I hope will continue to, play a pivotal role in the day-to-day activities of the modern Accountancy Firm.

With recruitment proving difficult, despite many fabulous tax recruitment firms now being in operation, software can allow automation of compliance work in particular. It has freed up the time of existing teams and allowed them to open up conversations with clients around Tax Planning and Exit Strategies.

Related: Here’s why you should use an online R&D tax credit software portal

Automation and digitalisation

Remember when RTI rules came into effect for Payroll? Automation and digitalisation of that process meant that many Payroll Bureaus now run hundreds of payrolls for clients.

Quarterly VAT returns and Year Ends can now both be automated, in real time, with the correct software in place.

Providers have already written code to cope when Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) comes into force from April 2024.

So with automation comes a leaner, streamlined and more profitable Firm, right?

Well, I suspect it will vary from Firm to Firm. Software costs have added another outgoing for many; there are even pieces of software on the market now that bring various packages together into one, centralised package.

Related: How to remotely prepare R&D tax claims

The benefits of using a Software in the Accountancy Industry

In practice, it frees up the time of Client Managers, Partners and Directors alike to focus on looking forward with clients, as opposed to the traditional retrospective view many Accountants have had in the past. For Partners and Directors, it allows them to have a holistic view of staff performance and monitor time efficiency key performance indicators (KPI’s).

There are a great number of Accountancy firms who have embraced technology, software, and “cloud accounting” and are thriving because of it. It is the Directors and Partners of such firms who are looking towards the future of this industry. A future I believe is looking very bright indeed.

Software is here to stay; and if used correctly can be the basis of a truly exceptional, profitable and successful business.

Related: R&D tax relief for digital and tech companies – All you need to know

Over the last decade, the UK has been a world leader in technology. The pandemic has increased reliance on technology, especially digital forms of communication and social media. During 2020, the number of tech jobs on offer in the UK was on average 259% higher than in continental Europe. 

The number of digital companies in the UK has also increased in recent years. Figures gathered by the Office for National Statistics and Companies House, and analysed by Tech Nation, reveal a total of 19,465 new UK tech businesses were launched in 2020. That’s a new tech company launching every 30 minutes.

You may be pleasantly surprised to learn that a lot of their development work could be eligible for the scheme.

Digital and Tech in the UK

The annual Tech Nation Report shows that the UK tech sector has emerged largely unscathed from the effects of Brexit and the global pandemic. In fact, the figures from 2020 demonstrate that the sector is still on an upward growth trend. Deep tech investment in the UK went up 17% during 2020, the highest rate of growth globally. On a broader scale, the tech sector’s GVA (Gross Value Added) economic contributions have been growing by an average of 7% since 2016.

Related: The basics of the RDEC scheme explained.

The latest data from the ONS on R&D tax credit claims reveals the number of claims coming from each sector of the UK economy between 2019-2020. This sector was responsible for 19% of R&D tax credit claims during the above period. 

Technology also has a large part to play in the UK government’s ‘levelling up’ strategy. As a result, the future for UK tech companies looks bright. As confirmation of this, the UK government seems to be continuing to invest heavily in the digital technology industry. Annual investment in tech increased from £1.2bn to £11.3bn between 2010 and 2020. In addition, according to the Digital Economy Council, £13.5bn of venture capital has been invested in the UK’s tech sector during the first half of 2021 alone.

Qualifying R&D activities within the technology sector

Many projects undertaken by technology companies involve the production of new products and processes, which means a lot of the costs incurred by the sector will qualify for R&D tax credits.  

Here are some broad examples of the types of qualifying R&D work that is likely to come from the technology sector:

• Technologies to improve manufacturing processes.
• Developing new software or improving existing functionality
• Developing and testing prototypes.

Below is a list of roles commonly found in digital tech companies along with their qualifying R&D work.

Web developers

Website development on it’s own is unlikely to qualify for the R&D scheme However, if there are significant challenges that arise due to new functionality requirements, there may be scope to apply some costs under the R&D scheme.  

 Below are some examples of web development work that you may be able to include:

• Development of new algorithms 
• Developing cross-platform capabilities across existing software.
• Enhancing publishing and cloud-based management systems.
• Developing cyber security tools for e-commerce websites.
• Integrating software components into a single unified system.
• Developing digital marketing technologies (third-party software tools).

E-commerce websites

E-commerce includes the transmission of data and funds, with these transactions taking place between businesses (B2B), businesses and consumers (B2C), or any combination of these. 

Setting up an e-commerce marketplace is a relatively straightforward task. However, developing new features can be costly and complicated, which can entail the resolution of technical uncertainties as data and transactions grow. These technical challenges are important to be aware of, as efforts to overcome them have the potential to qualify for R&D tax relief. 

Here are a few of the common areas that e-commerce may be able to claim for:

• Automation of promotions and discounts: Special offers often complicate the checkout process and can lead to error. E-commerce websites have to calculate and validate multiple promotional inputs through an automated checkout system, this may not be a straightforward process. 
• Staggered payments: Some purchases require a sequence of payments. Examples include required deposits for travel packages and hiring equipment. As above, this process may need more complex integrated solutions.
• Product availability: Some products have multiple options and websites need to accommodate the range and how they combine. Creating a seamless customer experience may qualify as R&D work. Note, front end design rarely qualifies for R&D, the focus is on technical back-end challenges
• Eligibility checkers: Purchases may require background information on buyers, like credit scores. As a result, links to other databases or systems may be necessary, this may not be a straightforward process.  
• Integration with third-party sites: Integration with third party software to track deliveries and monitor stock levels can involve a few non-routine challenges. 

Software development 

Software development may be eligible for the R&D scheme. 

In the past, the guidelines on qualifying R&D work have struggled to incorporate all elements of software development. These are outlined by the department for Business Energy and Industrial Strategy. However, HMRC is now expanding the allowable costs to be in line with current technology trends. You can expect this area of work will only open more doors to R&D tax relief in coming years. 

HMRC are clear on what they won’t accept when it comes to software claims, however:

• Development of routine software characteristics.
• Maintenance activities that fix minor faults.
• Activities that involve the transfer of software to production systems. This is because these activities usually occur after the uncertainty has been resolved.

R&D tax credits for data analytics and cloud computing

HMRC is expanding the scope of what qualifies for R&D tax credits to include data analytics and cloud computing costs. However, this is still an ongoing process. In March, HMRC published the results of their consultation on R&D tax relief in the UK. It saw businesses and industry groups across many sectors brought in to have their say. The focus was on the costs that companies can include in R&D tax credit claims.  

The consultation concluded that developing methods to analyse data, as well as payments for cloud services are standard occurrences in modern R&D. The latter includes platform as a service (PaaS), software as a service (SaaS) and infrastructure as a service (IaaS) expenditure. Therefore, there is a strong case for them to be included in the R&D tax credit relief scheme in the future. No change to government policy has been made as of yet, however.

If your client works in this field, though, be sure to keep an eye out for updates to HMRC’s policy on R&D tax credits. 

What made.simplr can do for you

As a digital tech company, your client will likely appreciate the value that technology can add to their business processes. Completing an R&D tax credit claim also falls into this category! That’s why at made.simplr we’ve developed the software to help you claim R&D tax credits efficiently and accurately. Automation and integration are just some of the features we offer to help you ensure your client gets the full benefit they deserve.

Find out what else you can look forward to by booking a demo with our experts today!

The most recently published data on R&D tax credits shows the manufacturing sector was responsible for 22% of all R&D claims made as of March 2020. This amounted to almost £2bn in R&D tax credit relief.

It’s not too surprising, as the manufacturing sector contributes significantly to the UK economy. The nature of the industry also makes it ideal for undertaking qualifying R&D activity due to its focus on products and production processes. If your client sits at the head of a manufacturing business, they may have a lot to gain by pursuing an R&D tax credit claim.

Why manufacturing is important for R&D

According to Make UK, formerly the Engineering Employers’ Federation, the UK manufacturing sector employs 2.7 million people and contributes 11% of the economy’s Gross Value Added (GVA). Crucially though, their statistics also conclude that manufacturing is responsible for producing 65% of all business R&D. With the sector only producing 22% of R&D tax credit claims however, it seems many manufacturing companies are missing out on these benefits. 

Manufacturing work often goes hand in hand with research and development endeavours. Developing a new product or process, or making improvements to existing ones, are what HMRC will look for in a manufacturing R&D claim. However, R&D within the manufacturing sector is often costly due to the consumption of materials. By extension, this means the trial and error process can potentially incur greater losses for manufacturing sector businesses than other industries. Manufacturing businesses are also often likely to reinvest money from an R&D claim into further qualifying R&D work. 

Looking to the future, the Annual Manufacturing Report 2020 reveals manufacturing businesses are confident about their R&D opportunities. 84% of businesses in the sector feel that making their business more climate-friendly will allow them to make beneficial changes to how they operate. Furthermore, 81% of UK manufacturing businesses say that incorporating digital technologies will enable them to access new markets. These changes are likely to bring about further technical innovations.

Notable UK manufacturing subsectors

Manufacturing covers an extensive range of businesses across the UK. These can be roughly grouped together based on the products they produce and the markets they serve. According to themanufacturer.com, the following sectors are some of the most prominent in the UK, with their corresponding statistics: 

Electronics – directly accounts for over 800,000 jobs. 95% of electronics businesses in the UK, equaling close to 6,000 businesses, are SMEs.

Food and Drink – contributes 400,000 jobs to the UK economy. This is the largest manufacturing sector in the UK in terms of annual turnover (£21.9bn). Predictions are that food and drink manufacturers will require an influx of new products in the coming years. A qualifying R&D project in this sector could also be an improved  version of an existing food brand, for instance Coke Zero etc.

Energy – responsible for 137,000 jobs as well as approximately 500,000 indirect jobs. Indirect jobs come about incidentally as a result of manufacturing projects. For instance, increased demand for certain materials leads to factories needing more workers. 

Textiles – the UK is the third-largest textile employer in the EU. This sub-sector employs more than 340,000 people across over 79,000 businesses.

Aerospace – 128,000 direct jobs and 140,000 indirect jobs. Although an area of the UK economy that was heavily impacted by the Covid-19 pandemic, previous productivity growth implies a bright future. The UK has 18% global market share in aerospace, the largest amongst all European countries. 

Automotive – 18 of the world’s top 20 automotive suppliers are based in the UK. 169,000 jobs are found in the automotive sub-sector.

Manufacturing is broad in its applications and as such, there are many types of projects that employ manufacturing practices. Here are some of the major ones:

• Food and drink
• Textiles
• Fuel products
• Printing and publishing
• Transportation equipment
• Chemical products and artificial fibres 
• Metal products
• Electrical equipment
• Woodworking

Complications to be aware of when claiming R&D tax credits

Fixed Assets:. Fixed assets are long-term tangible assets that a firm owns and are not expected to be sold within a year. Labeling a cost as a fixed asset can potentially complicate a claim, as most fixed assets are not claimable under the current schemes. 

Prototypes: Development of prototypes qualify for the R&D tax credit scheme. However, if a prototype goes on to be purchased by a consumer, it cannot be included in your client’s claim. 

Directors’ Remuneration: Directors may choose to be compensated with dividend payments rather than a salary due to their tax benefit. However, dividend payments are not eligible to be included in an R&D claim. The topic of directors’ remuneration will vary from business to business, so it’s worth discussing with your client. For instance, if the company director is very involved in R&D, it may be more beneficial to simply increase their salary as wages are claimable as qualifying R&D costs.

Prepare an R&D tax credit claim with made.simplr technology

As a manufacturer, your client will appreciate making their R&D tax credit claims process as efficient as possible. made.simplr’s software includes a host of automation and management tools. Integration with Xero accounting software allows your client’s data to be transferred across seamlessly.

Book a demo today!

SMEs (or small and medium-sized enterprises) make up the majority of businesses operating in the UK. According to the UK Parliament Business Statistics published on 22nd January 2021, there were six million SMEs in the UK by the end of 2020. To put this into perspective, this accounted for over 99% of all UK businesses.

HMRC has recently released its annual R&D tax credits statistics and of the 85,900 total R&D tax credit claims made for the year ending March 2020, 76,225 of these were SME claims. This marks a 16% increase on the previous year.

What are SMEs?

For the purposes of R&D tax credits, HMRC defines a business as being an SME if it has: 

• Less than 500 employees and,
• a turnover of less than €100m or
• a balance sheet worth no more than €86m.

The SME scheme

For small and medium-sized businesses, there are two schemes that provide benefits through R&D tax credits, the SME scheme and the RDEC scheme. As the name suggests, the SME scheme was designed for small and medium-sized businesses. The RDEC is for large companies but may be applicable to SMEs in certain circumstances, such as receiving grant funding or undertaking subcontracted work. Both schemes work by allowing companies to benefit from their spend on R&D projects. The amount of benefit your client can receive is based directly on the costs incurred during their R&D work. The SME scheme offers relief of up to 33% of your client’s total qualifying R&D costs. This results in either a cash payment or as a reduction to your client’s Corporation Tax liability, which translates to a significant monetary amount for small and medium-sized businesses. According to HMRC’s latest statistics, in the year ending March 2020, £4.4bn worth of tax relief was claimed through the SME scheme. 

The SME scheme also allows unprofitable businesses to benefit. When a company ends their financial year in a loss making position, they can ‘surrender’ some or all of the losses for cash. This payment is calculated at 14.5% of the surrenderable loss value. This cash could serve as the lifeline your client needs to get back on track.

Qualifying R&D costs

Although all of the costs involved in your client’s R&D project likely contribute towards the end goal, not all of them will qualify for R&D tax credits. You and your client need to know what can and can’t be included as it will help maximise their claim. This is doubly important as any expenditure wrongly included in a claim could result in an HMRC enquiry. 

Related: What expenses qualify for R&D tax credit?

HMRC outlines qualifying costs under the SME scheme, which are as follows:

• Employee costs 

Payroll costs can be included for employees that directly contributed to the R&D.. As well as employees who are directly involved in R&D you can also include employees in supportive roles.

• Subcontractor costs

R&D work subcontracted to another company may also be claimable, which can be claimed at a rate of 65% if the companies are not connected.

• Software and Consumables 

Software used in R&D processes may qualify. This can include development and testing tools.  

Consumables are anything that is consumed or used up during R&D processes. This includes materials, chemicals, components, fuel, light, heat or other substances. 

R&D costs not to include

• Rental costs.
• Trademarking or patenting costs.
• Costs of producing and distributing goods and services.
• Land.
• Capital.

Related: Most common overlooked expenses when making an R&D claim

The RDEC scheme

Last year more than half of the RDEC claims were made by SMEs. Here are some of the reasons why an SME client may have to apply for RDEC:

• Your client is a connected or partner company: Combining the size of multiple businesses can exceed HMRC’s SME definition.
• Your SME client has done Subcontracted R&D: Subcontracted SMEs cannot claim through the SME scheme. This is to prevent individual R&D projects from being claimed by multiple companies for the same costs. They may be able to claim through the RDEC scheme.
• Your client is a recipient of Notified State Aid: This is particularly important to bear in mind in the aftermath of the Covid-19 pandemic, as many businesses have received government support. Depending on the nature of the aid, part of your client’s R&D tax credit claim may have to be done through the RDEC scheme.

Related: How Covid-19 funding will impact R&D tax credits.

The RDEC scheme allows businesses to claim up to 13% back from their qualifying R&D expenditure. It should be noted that this is a gross percentage because this benefit is subject to Corporation Tax.

Related: The basics of RDEC

Why small and medium-sized businesses are well positioned to benefit from R&D tax credits

Since small and medium-sized businesses are predominantly focused on scaling up and expanding their operations, SMEs often conduct qualifying R&D work without realising that it qualifies for the scheme. This includes improving upon existing products or processes.R&D tax credits can be claimed for work done during your client’s two previous accounting periods. 

Related: R&D tax credits: a boon for small businesses.

How to prepare a claim

R&D tax credit claims might seem time and labor intensive. With the proper tools, however, they can be completed quickly and efficiently. Here are the simple steps to follow:

• Select the projects you are going to include in your client’s claim: Qualifying R&D projects are defined by HMRC, with this definition applying to both the SME and RDEC schemes. Read: 4 ways to find out whether your project qualifies for R&D tax credits.
• Understand which scheme your client’s costs will be put through: As discussed earlier, there are many factors to consider when understanding if a cost should be put under the SME or the RDEC scheme. 
• Add up your client’s total qualifying R&D costs. 
• Write up a technical report: This is your client’s opportunity to show HMRC how they overcame uncertainty in their R&D projects.
• Complete and file the CT600L: Inputting your client’s R&D costs into the form accurately.

Ensure the best for your client with made.simplr

We trust this guide has been helpful for you and your client. If you want to ensure a more streamlined process for putting together  their R&D tax credit claim, made.simplr is the software that can help. Our R&D tax credit platform allows the preparation of your client’s claim to be fast tracked, with integration to Xero accounting software.

We make  R&D tax credits simplr!

Find out  how by booking a demo with us today!

The Covid-19 pandemic has led to many businesses changing the way they operate. Of all of these changes, remote working has been by far the biggest shift affecting both workers and their managers in equal measure. Indeed, your client may not have been in their usual office for over a year and a half at this point. With few face-to-face meetings, and potentially being off-site for the majority of the project’s duration, you may be unsure of the best way to prepare an R&D tax credit claim. The good news is, with a bit of planning, it can all be done remotely. 

What you need for an R&D tax credit claim

Whether you’re preparing your client’s claim remotely or not, the process of applying for R&D tax credits remains the same. 

• Choose eligible R&D projects and identify qualifying expenditures: 

Talk through all R&D undertaken during the client’s financial year and identify the projects that fit HMRC guidelines to include in their R&D tax credit claim, along with the qualifying costs in each. Accurate record-keeping on the part of your client will make this step very straightforward however HMRC also understands that timesheets may not be used by many SMEs so accurate estimations on time are acceptable. 

There are a few categories of acceptable qualifying costs as defined by HMRC’s CIRD. Read about how HMRC defines qualifying R&D work.

• Prepare a financial report: Creating a financial report involves collating and categorizing all your client’s R&D costs into three main areas: Employee costs, Subcontractor costs, and consumables.

If your client is eligible to use the SME scheme they increase their qualifying expenditure by a further 130%. Read about the other ways R&D tax credits are a helping hand for small businesses.

• Prepare a technical report: This supporting documentation outlines how each of your client’s projects meets HMRC’s definition of R&D. This step goes a long way in ensuring your client’s claim is successful and reduces the growing risk of a query.
• Fill out the CT600L: Completing this form is the final thing to do before sending off your client’s claim. It involves entering your client’s financial values, which were determined in the financial report, into the correct boxes.

How to prepare your client’s R&D tax credit claim remotely

To gather the information needed for an R&D tax credit claim your client may have to involve their technical experts in your communications as they themselves may not have the details of specific R&D activities. These experts should be the people in positions that oversee R&D projects, such as technical supervisors and managers. Some of the communications may involve: 

• Video calling

Due to the global pandemic, face-to-face meetings have become much less common. Platforms like Zoom, Microsoft Teams and Google Meet offer free-to-use options for making video calls. You may want to check beforehand to ensure a stable internet connection as a less reliable one may make the consultation frustrating for both parties. Video calls are especially useful when preparing an R&D tax credit claim remotely as your client can easily consult and include their relevant experts. One of the many features of video conferencing includes the option for screen sharing. 

• Screen sharing

Preparing an R&D tax credit claim involves dealing with numerous figures and occasionally technical drawings or images. There may be questions regarding certain parts of a data set or how a figure was calculated. Screen sharing allows your client instant visibility and collaboration through presentation sharing. With greater interaction through screen sharing both parties can get answers quickly.

The benefits of preparing R&D tax credit claims early

Whether preparing an R&D tax credit claim in person or remotely it is best to get started early. 

The time involved in preparing R&D tax credit claims can put some clients off. However, increased’ demand by businesses for financial relief has put R&D tax credits in the spotlight. It is best practice to start the technical data gathering at the beginning of each financial year and do the financial calculations as soon as your client is close to filing their tax returns.

Recording the details of R&D work as it happens makes preparing a claim much simpler when it comes time to file.

Get help preparing your client’s R&D tax credit claim remotely with made.simplr

Luckily there is an easy to use software platform to help you gather all the supporting documentation as well as calculate your claim and create your financial and technical reports. made.simplr have been helping accountants to prepare hundreds of client’s R&D tax credit claims. The software makes both your and your client’s lives easier by allowing you to:

• Manage claims online – plan your claim through our online platform. Set access parameters so your staff can work on different parts of the claim.
• Integration with Xero – your claims are securely automated. No digging or manual entering to get the data you need.
• Performance analytics – no matter the client or claim, we crunch the numbers to give you the bigger picture.

Find out how to better help your clients remotely by booking a demo today.

While most R&D projects have a start date and an end date, when it comes to preparing an R&D tax credit claim, determining what those are can be challenging. HMRC’s guidelines for what stages of a project qualify for R&D tax credits are narrower than the full duration of the project.

Often, your client’s understanding of their project timeline may be quite different. For them, the project starts with the idea of the product or service and finishes with the end result (either on the shelves or in-service). However, HMRC only considers the research and development stages of the project as part of a claim.

Why is it important to note the difference between HMRC’s definition and your client’s? Firstly, the duration of an R&D project is key to knowing which costs can be included in your client’s claim.

Secondly, you’ll need to determine which accounting period(s) the qualifying R&D project falls under.

Thirdly, including R&D costs in a claim which fall outside of HMRC’s R&D definition could lead to HMRC querying or rejecting your claim.

Related: R&D tax credits explained – What are they? Is your client’s company eligible?

How to figure out your client’s R&D project timeline: the start and the end

R&D work often takes place over many years, with projects incurring varying amounts of expenditure over this time. As a result, qualifying R&D projects can be difficult to track from start to finish when putting together a claim.

‘R&D begins when work to resolve the scientific or technological uncertainty starts, and ends when that uncertainty is resolved or work to resolve it ceases’ – HMRC

What stages can you claim for?

The key stages of any research and development project are planning, market research, product research and development, testing, design, marketing, and rollout. Your client can disregard the marketing and rollout phases, as there is no technological uncertainty in these stages. But the other stages – product research and development and testing, in particular – is where there is most likely to be uncertainty that was resolved through a research and development process.

• The start of R&D: By HMRC’s definition, the R&D work starts when an uncertainty has been identified, usually during the research and development, testing and prototyping stages as mentioned above. This occurs when your client finds that established methods are unable to solve the uncertainty. This most often leads to qualifying R&D work as it creates the need for the project to venture into the realm of new and innovative ideas and work to overcome said uncertainty.
• The end of R&D: the end of a project is when the uncertainty has been resolved or the work to resolve it ceases. Point 34 of the latest guidelines from HMRC explains it in more detail: ‘R&D ends when knowledge is codified in a form usable by a competent professional working in the field, or when a prototype or pilot plant with all the functional characteristics of the final process, material, device, product or service is produced.’

This could be when a new product gets developed, or a working prototype is successfully produced. Or if your client decides not to continue with the project.

It’s important to note that if your client revisits the project at a later stage and makes revisions that try to overcome any scientific or technological uncertainty that may have arisen post-production, they may be able to include this as qualifying R&D. And so, the project starts again.

However, any further expense to refine the appearance of the solution cannot be included in a claim. This is because the aesthetics and design stage of the project does not affect the functionality of the end product, and does not qualify for R&D tax credits.

You and your client should be crystal clear on what uncertainties their projects seek to resolve. It’s important to involve the people that worked to achieve these technological advances. Having a clear understanding of what the technical uncertainties are will help not only in identifying the start and end dates of the project but also in demonstrating how the projects qualify and what costs are eligible within the R&D tax credit claim. Remember, your client will need to keep a strict paper trail of all expenses and working documents.

How far back can my client claim?

The timeframe for R&D tax credit claims is two years from the end of your client’s accounting period. HMRC, therefore, allows R&D tax credit claims to include R&D costs from any projects that fall within this period. The good news is it’s not just completed/resolved projects you can claim for, but also ongoing and even failed projects.

Related: What expenses qualify for R&D tax credits?

Ongoing projects

If a project is ongoing, it can still qualify for R&D tax credits. You do not have to wait for a project to be completed to claim from HMRC. Many R&D projects have yet to reach a conclusion (successful or not) and HMRC has accounted for this. To clarify: if, at the end of your client’s accounting period, the project is still ongoing, any eligible activity can still contribute towards a claim for work completed within that period.

For example, if a company’s accounting year ends 31st March 2022 and they have never made a claim but have been carrying out R&D projects for a number of years, the company would be able to claim for the financial years ending 31st March 2021 and 31st March 2020, before a deadline of 31st of March 2022. If they have spent £50,000 on qualifying R&D activity on ongoing projects for the past two years, their claim would be worth up to £16,500 in cashback or tax savings.

Failed projects

It’s a common misconception that your client’s projects need to be profitable to qualify for R&D tax credits or relief. 

Failed projects can also qualify for R&D tax credits. In fact, a failed project is often a good indicator that there have been challenges and the project has sought to overcome a technological or scientific uncertainty – a key signal to HMRC that R&D work is taking place. The starting point of these projects remains the same, however, the endpoint is identified when the uncertainty fails to be solved by the project. Failed projects often have long development and testing phases. In this instance, it is up to your client to decide when to discontinue work on the project. 

How about claims for loss-making companies?

It’s also worth noting that loss-making companies can also qualify. Often, companies that have yet to make a profit either have ongoing R&D, or haven’t started selling their product yet. Again, this is often a sign that there are continued efforts to resolve uncertainties. 

Claiming R&D tax credits on failed projects or for loss-making companies can benefit your client. The funding made available through an R&D tax claim can provide a cash injection can boost cashflow.

Read more about how to claim R&D tax credit on a failed project in our featured blog.

Automate your client’s claim with made.simplr

With made.simplr’s R&D tax credit software, you will be able to identify the timeline of the projects your client is eligible for. Plus, by using our online platform, you can input, manage and track their R&D claims as they progress.

Let made.simplr do all the heavy lifting for your client’s R&D tax credit claim. 

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R&D tax credits are a huge boon for businesses of all sizes in the UK. As your client’s accountant, however, it is important to know exactly how R&D tax credits support companies.

Financial assistance is especially important in current times. As the economy continues to recover from the effects of the Covid-19 pandemic, many businesses still require support. Continue reading to find out what your client is potentially missing out on.

How R&D tax credits work

In order to encourage UK businesses to invest in R&D projects, HMRC offers R&D tax credits as a form of financial incentive. To this end, R&D tax credits provide a refund on Corporation Tax, a cash credit, or a combination of the two. The extent of this monetary benefit is based directly on the company’s qualifying R&D expenditure.

For small to medium-sized businesses there is the SME scheme. Applying to this will allow your client to claim back anywhere up to 33% of their R&D costs. For large companies, the RDEC scheme provides a maximum benefit of 13%. 

It is important to note here that the support offered by R&D tax credits comes as a percentage of qualifying R&D costs. This means the more R&D work your client undertakes, the more benefit they will receive. Additionally, being able to accurately identify all of your client’s R&D costs will ensure their claim is maximised. So far, £3bn has been confirmed as being claimed during 2018/9 through the SME scheme, with £2.4bn of relief being given through the RDEC. This data is still being collected and as such, the ONS estimates that the total R&D tax credit benefit for 2018/9 will be around £6.3bn.

Read about the types of work that qualifies as R&D.

Ways R&D tax credits support businesses

1. Growth and expansion. R&D tax credits have consistently been claimed more by small and medium-sized businesses than large companies. This is because R&D tax credits offer a form of income outside of traditional business means. As such, R&D tax credits are often complementary to young businesses, or small companies looking to expand. It supports them in this instance by improving business cash flow. This is a critical area of support for businesses looking to expand, as output often exceeds input when making levelling up purchases. This is particularly true for startups, who are often faced with many unforeseen costs to boot. Read more about the cash flow benefits of R&D tax credits.
2. The creation of an innovation cycle. Savvy business leaders and accountants can make the benefits of R&D tax credits go the extra mile by reinvesting them in the company. In this way, the initial investment in R&D can generate R&D benefits over and over again for little extra investment. This is because these subsequent R&D projects themselves generate more benefit through R&D tax credits. The end result is a self-generating cycle of innovation supported by R&D tax credits. All the while, your client’s business, product and processes are becoming more efficient. Here are some of the ways businesses can reinvest the money received from R&D tax credits:
   • Purchasing new equipment: Buying or renting production equipment can come with a hefty bill. However, this equipment may be necessary to increase the speed and efficiency of business and/or production processes. Furthermore, not being able to access new equipment might be holding your client back from conducting R&D work.
   • Funding subcontracted work: Outsourcing work can let your client utilise experts in their field outside of their business. Some businesses may prefer to subcontract rather than expand their team. Don’t worry though, subcontracted R&D work still qualifies for R&D tax credits.
   • Recruiting new talent: Building a team of leading experts in your field will invariably lead to a higher quality of output. This is also likely to facilitate new R&D ideas. 
   • Developing improved processes: A classic example of qualifying R&D, businesses often reinvest in improving their existing products and processes. This supports the business greatly as it increases productivity and profitability.
3. R&D tax credits can provide support to un-profitable businesses. Many people think that R&D tax credits are reserved for profitable companies but this is a misconception. In fact, if your client is unprofitable, they probably need the support of R&D tax credits more than if they weren’t. Under the SME scheme, companies can surrender their losses to HMRC in exchange for a cash credit. This provides £145 per £1000 of loss surrendered. If your client needs a quick cash injection, this avenue can provide that support. R&D tax credits can be claimed on unsuccessful projects as well. Read about how here.
4. Alleviate debt. Many businesses have taken on debt in the form of loans during the Covid-19 pandemic. R&D tax credits provide the funds necessary for your client to remove debt pressure. This supports the business in the long term by making its cash flow position more secure. Startups often naturally incur debt through innovation and expansion efforts, which is another reason R&D tax credits are beneficial for them. 
5. The ability to claim retrospectively. R&D tax credits are claimable on any qualifying projects from your client’s last two accounting periods. What’s more, your client can even claim after their tax return has been filed. An accounting period is typically 12 months long, meaning businesses can access R&D benefits two years after the R&D work took place. Therefore, even if your client doesn’t have the funds to conduct R&D right now, they can still claim for previous qualifying work.

Support your client with made.simplr

At made.simplr it is our mission to support your client to the best of our ability. Utilising our online R&D tax credit portal software will make sure their claim grants them the maximum benefit available.

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All businesses have a lot to gain by pursuing an R&D tax credit claim. However, there are a number of reasons that make them a great boon for small businesses in particular. The additional funding that small businesses can access through R&D tax credits is a large part of this. The way small businesses are able utilise and benefit from these funds goes a step further though.

It seems more and more small businesses are picking up on the boon of R&D tax credits. The number of claims made by small and medium-sized businesses has been on a mostly upward trend since the inception of R&D tax credits two decades ago. For example, in the financial year 2010-11 the number of claims through the SME scheme was 8,280. In the most recently recorded data from 2018-19 this number was 52,160.

Read on to find out the extent of the boons available to small businesses through R&D tax credits.

How to define a small business

For the purposes of R&D tax credits, there are exact parameters that small businesses must meet. This definition of a small business comes directly from HMRC so it is important to be aware of. To qualify as a small business a company must have:

• Fewer than 500 employees.
• A turnover of less than €100m.
• A balance sheet of no more than €86m.

There are some other requirements that your client’s business must fulfil in order to qualify for R&D tax credits, however. They must be:

• Based in the UK and subject to UK corporation tax.
• Attempting to solve a scientific or technological uncertainty.
• Spending money directly on R&D endeavours.

These apply to all companies looking to claim R&D tax credits, so keep this in mind even if your client helms a large company.

The SME scheme

As its name suggests, this scheme is only available to small and medium-sized businesses. The SME scheme allows these companies to claim back a percentage of their qualifying R&D costs. This amount is then deducted from the company’s yearly profit, thereby reducing the amount of corporation tax the business is subject to. This saving is also deliverable as a cash credit as opposed to a tax refund, or a combination of the two.

By using the SME scheme, a small or medium-sized business is able to benefit from a refund on 100% of their qualifying R&D costs. This then receives an enhancement of a further 130%, bringing the total deduction to 230%. Under the SME scheme,the benefit given this way goes up to 33%. This translates to up to 33p per £1 that the company spent on qualifying expenditure. Depending on the amount of R&D your client is conducting, this benefit can amount to tens of thousands of pounds.

A caveat to the scheme is that the maximum benefit of 33% is reserved for profitable SMEs. Don’t worry though, loss-making SMEs can still benefit from R&D tax credits by using the scheme. To do this they must surrender their losses. In exchange for the losses, HMRC offers loss-making SMEs a cash credit. The maximum benefit available to loss-making SMEs is 14.5% of the surrenderable losses.

This is not to discount the benefits of R&D tax credits for large businesses though. Large businesses can claim R&D tax credits using the RDEC scheme, which you can read all about here.

Benefits of R&D tax credits for small businesses

1. Business development and growth. As outlined earlier, R&D tax credits provide small businesses with a financial benefit. One of the key ways your client can use this funding is to grow their business. Costs such as hiring new staff, expanding premises and outsourcing work all contribute towards the leveling up of your client’s business.
2. Increased efficiency and productivity. This next point sounds obvious but R&D tax credits incentivising R&D work among SMEs is a great boon for them. This manifests by increasing the efficiency of business operations. For example, a new production method may now be cheaper and take less time due to the use of different materials.
3. A welcome cash injection in the early years. Almost all startups will begin as small businesses. These early years tend to be turbulent, particularly in terms of unforeseen costs. As a result, the financial boon of R&D tax credits is especially welcome for these companies. Read more about how to claim R&D tax credits if your client is a startup. What is more, the early stages of a business invariably involve trial and error. Products might undergo new iterations and various processes might get tweaked. These naturally occurring changes are likely to qualify as R&D, which is one reason SMEs are able to benefit more from R&D tax credits than large ones.

The degree of benefit available to small businesses is directly proportional to the amount of R&D work they are undertaking. However, this assumes that all of the qualifying costs are correctly identified and included within their R&D tax credit claim. Read about what expenses qualify for R&D tax credit. 

Because identifying what does and doesn’t qualify as R&D is difficult, it often pays to get help from expert third parties. Here are 4 ways to find out whether your project qualifies as R&D. Speaking of experts though…

Ensure a maximised benefit by using made.simplr technology

Although understandable, small businesses are often too preoccupied with their day-to-day running to pursue financial boons such as R&D tax credits. However, small businesses are more likely to be completing qualifying R&D work unbeknownst to themselves. 

Fortunately, your client doesn’t have to go it alone. made.simplr’s R&D tax credit claim portal software can help by taking all the time and effort out of completing a claim. Utilising features like Xero integration, analytics and management systems removes any risk of errors. The end result is a claim which is 100% accurate and reviewed multiple times by R&D tax credit experts. Look no further to guarantee the maximum financial boons for your client. 

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Many businesses investigating R&D tax credits can find it confusing at first. The application process in particular can seem daunting, even though it is in fact relatively straight forward. As long you keep all company records, you will have access to all the information you need when it comes to submitting your claim. It’s just a matter of following the correct process and criteria. Unfortunately, this apparent complexity does mean many businesses ignore R&D tax credit claims for fear of screwing up their claim. However, mistakes are easily avoidable with the right knowledge of R&D and what HMRC requires from companies applying for R&D tax credits.

As with the criteria surrounding R&D tax credits, ‘screwing up’ is an intentionally ambiguous term. This term is used because HMRC themselves intentionally define R&D in a vague way to allow as many businesses as possible to access the benefits of R&D tax credits. Although this ambiguity is recognised, this does lead to some niche cases where executing a claim becomes unclear.

This blog is here to shed light on the simple errors companies make when applying for R&D tax credits. It’s important to know what the possible mistakes are and how they affect a claim ahead of time. This thereby enables you and your client to avoid them altogether and ensure the maximum R&D tax credit benefit.

Common things to avoid before or during an R&D tax credit claim

The following points cover aspects of your client’s business which, if altered, can compromise their R&D tax credit claim. This considers the type of company they are, how they operate and the work they do.

It is advisable to avoid these changes as they can have unforeseen consequences for your client’s R&D tax credit claim. They can limit the amount that’s claimable, alter how to apply, or even make the claim obsolete. Some of these common occurrences result in all three. Continue reading to find out about each example’s context, ramifications and how to avoid it.

• Internal restructuring

The restructuring of your client’s business can affect their claim in a range of ways. However, it almost always happens when the state company’s trade and/or assets are changed. With R&D tax credits, this will mean a claim cannot include any qualifying costs produced after the restructuring. This might seriously limit the amount your client’s claim is worth if they restructure during an R&D project. As such, this mistake can be avoided by completing all outstanding R&D projects before a restructuring. The R&D work undertaken is still claimable at a later date, as per the standard parameters for claiming R&D tax credits.

However, care must be taken when the internal restructuring involves multiple businesses. If a company’s assets and tradables get moved to another company during the restructuring it can disallow them from claiming through the SME scheme. Though this only happens if the original company is ‘wound up’. Winding up, which is also known as ‘compulsory liquidation’, can be done by a third party when they are owed money by a company. The third party can then apply to the court with a ‘winding-up petition’. If successful, it will have the following effects:

• Company assets get sold.
• Legal disputes get settled.
• Funds get paid to all creditors.
• The company collects any money it is owed.

To wind up a company, you must have proof that you are owed at least £750 and that the company in question cannot pay you. This eventuality makes it very important to settle your debts promptly, not only for the purposes of R&D tax credits.

A claim can also get compromised when assets are transferred internally amongst a group of companies. There won’t be a problem so long as both companies are registered in the UK and pay UK Corporation Tax. As a basic requirement of R&D tax credits, this requirement is often overlooked.

There could be a problem if your client’s company outsources most or all of the R&D work to staff employed by another company. When companies incur costs on behalf of one another, the cost-bearing company can recharge the company employing them. As such, if the recharge does not explicitly state that it is for R&D work then it is hard to identify which company is conducting the R&D. Additionally, the recharge may take a while to be sent which may not allow time for the project to be claimed for at all.

• Badly organised outsourcing

As discussed above, outsourcing R&D work can create issues when it comes to claiming R&D tax credits. It is a boon to be able to include the costs of subcontractors and external workers though, so it pays to know how it can screw up a claim.

First of all, it can be difficult to categorise outsourcing between being subcontractors or external workers. Some of your client’s outsourced costs might not fit into either group. Not knowing how to categorise outsourced activities risks the inclusion of costs that aren’t eligible for R&D tax credits.

Furthermore, there are restrictions to subcontracted work within the RDEC scheme. To qualify, the work must be done by an individual, a qualifying body or a group of individuals. If your client includes subcontracted work done by other parties in their claim, it could screw it up.

• Not including all qualifying R&D activities and costs

This is a very common mistake among first-time claimers, who are often unfamiliar with the corner cases of qualifying R&D costs. If your client doesn’t include all their qualifying R&D activities and costs in their claim it won’t reach its full potential. As a result, they’ll be missing out on monetary benefits.

You can find the list of all qualifying costs here.

• Including projects and costs that are ineligible

Businesses sometimes categorise work as R&D when it isn’t. This results in a lot of wasted time in filling out areas of a claim which aren’t relevant. Furthermore, as discussed previously, including ineligible work in a claim can result in rejection and an HMRC investigation.

This takes the previous point a step further as it poses a significant risk to the success of a claim. To avoid this, seek out HMRC’s guidelines for defining R&D and get expert advice.

• Paying Directors large dividends

Often owners pay themselves dividends rather than salaries because it means they are subject to lower levels of income tax. However, dividends are not a qualifying R&D cost as they are not a result of employment. This can drastically reduce the value of a claim if, for example, a major technical director is paid by dividend.

• Lack of record-keeping

Due to the fact that R&D tax credits include work spanning over two years, businesses often forget the work they’ve done. This can lead to valuable projects being missed in a claim. This is also important as records help when it comes to providing supporting information for your client’s projects. Without adequate records to look back on, a business may not be able to explain its R&D processes in enough detail.

Record-keeping is just good business practice to ensure that all qualifying R&D work gets included in your client’s claim.

• Growing beyond the size of an SME

Businesses naturally increase in size as they continue to expand and grow. For R&D tax credits though, being an SME offers a greater benefit than for large companies. As a result, if your client grows beyond SME size then they are effectively losing out when claiming R&D tax credits.

This gets compounded by the fact that the line between SMEs and large companies is very black and white. Once a business exceeds 500 employees, or a turnover of €100m and a balance sheet of €86m, it is classed as a large company with no ifs or buts. Though they then get granted a ‘year of grace’, during which they can still claim as if they were an SME.

• Transitioning from loss-making to profit-making

This might seem strange – why would anyone want to remain in loss? Well, the reason is that companies in loss can surrender their loss to HMRC for a cash credit. For many SMEs, this short-term cash injection is extremely valuable. It may even mean the difference between liquidation and continued trading. At the very least it might facilitate more R&D work. However, if your client expects to be profit-making in the following year, surrendering losses can be detrimental. This affects their accounts because the loss cannot be used to offset corporation tax moving forward.

It is not advisable to deliberately compromise your client’s profit-making ability, but it is worth bearing in mind how it will affect an R&D tax credit claim if they choose to pursue one.

Read more about how to claim R&D tax credits on a failed project.

It should be said that although these examples are detrimental when applying for R&D tax credits, they might be sound business decisions. This is why these examples commonly appear in businesses looking to claim R&D tax credits. If it’s possible to avoid them though, your client is guaranteed to benefit far more from R&D tax credits. As your client’s accountant, however, it’s also important to consider the tradeoff of benefit. For instance, your client may want to delay their restructuring until after they make a successful claim on a busy year of R&D work. Due to this not always being an obvious choice, advice from R&D tax credit experts and specialist software is recommended.

Take extra care with large software claims

A sector that has been growing rapidly with regards to R&D eligibility has been the software industry. More specifically, communication and information, and professional, technical and scientific software. This has manifested in the form of developments like artificial intelligence, cloud computing, augmented reality and more. The difficulty with software R&D is that much of it can be work that does not directly contribute towards the resolution of the project. As such, it’s hard to know what to include in a claim that features software projects.

HMRC outlines what businesses should do when claiming on software projects:

• The scientific and/or technological uncertainties which the project addresses must be clear.
• The technological input for the project needs to be highlighted, as opposed to its commercial output.
• Technological uncertainties get solved by accurately highlighting the challenges faced during the project.

The risks of screwing up a claim

Unsuccessful R&D tax credit claims can result in some dire consequences for the claiming company. Chief among these is an investigation by HMRC. This gets triggered when HMRC identifies or suspects errors or inaccuracies in an R&D tax credit claim. The inquiry then requires the company to produce evidence to validate its claim. If this can’t be done, the company will get hit with a fine. This can be up to 100% of the value of the claim. Given that the business will also have to pay back any benefit already gained, this fine can be devastating to small and medium businesses.

If your client is facing an HMRC inquiry, it is advisable that they act with transparency and professionalism. As long as this occurs, there are unlikely to be any financial consequences. HMRC aren’t trying to catch your client out, they merely aim to discourage fraudulent claims.

Read about the common myths, misconceptions and missed claims of R&D tax credits.

Ensure no mistakes with the help of made.simplr

Doing an R&D tax credit application all on your own takes time. If your client’s claim gets screwed up then this investment of time was a waste. Our R&D tax credit software saves your client valuable time while ensuring accuracy. Your client will get access to many features that will streamline their application process and simplify the collating of information. Among these is integration with Xero, easy-to-use analytics and online management tools.

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On the surface, it may seem that R&D tax credits only offer companies a financial benefit. In reality, the benefits of R&D tax credits go much deeper and chief among these is cash flow.

One priority that all businesses share is to obtain profitability and cash flow management is the most surefire way to achieve this. Ensuring the money coming into a business is more than the money leaving it is not easy though. This has been especially true recently, with Covid-19 restrictions waxing and waning over the last year and a half. As such, many businesses have sought out less traditional income sources.

R&D tax credits are here to increase businesses’ cash flow by granting additional income.

The importance of obtaining good cash flow through R&D tax credits

As you know, cash flow concerns the movement of money both in and out of your client’s business. As long as your client is receiving more money than they are spending, then their business will be in profit.

While a profitable business is the end-goal for all companies, what we often see when it comes to R&D specifically, is that the profits are predominantly only seen in the long run. This can leave gaps in your client’s cash flow while the project is underway. However, if your client pursues an R&D credits claim they will be executing a cash flow strategy that is hugely beneficial. This is because the financial benefit offered by R&D tax credits can plug the gaps in the short term. Furthermore, R&D work often results in greater efficiency with regards to production processes. This enables positive cash flow in the future by reducing the outgoings of your client’s business.

At the end of the day, cash is what keeps businesses alive. While cash flow is important for all businesses, below are some examples of businesses that are particularly affected by it.

• Startups: Cash flow is most important for startups as the early stages of a business come with a lot of spending. What’s more, is that this financial strain is often due to investments that only yield returns in the long run. As a result, startups aren’t always able to rely on their products, services and customers alone to balance their books. To achieve a positive cash flow, startups must often seek out alternate ways of generating revenue. 
• Seasonal businesses: These businesses’ inflow is not consistent because it relies on products and/or services that are in demand during only small parts of the year. The huge lulls in income seasonal businesses experience often make cash flow an issue. Sources of income not related to the businesses’ main product help these businesses top up their finances. 
• Cash businesses: Businesses such as retailers and restaurants often experience input and output as physical cash. Unless this is well recorded through invoices or other forms of paperwork, it is hard to ascertain the state of the company’s cash flow. Even so, assessing the state of the business’s cash flow can be complicated and time-consuming.

The cash flow benefits of R&D tax credits

Difficulties with cash flow arise mostly as a result of a lack of income sources. R&D tax credits help businesses achieve a positive cash flow in two ways.

1. R&D tax credits as a new source of income

Once you establish the processes and work that qualifies as R&D within your client’s business, they’ll be able to claim year-on-year. R&D tax credits provide either a reduction in corporation tax or a tax credit. Both of these are a significant form of income for businesses of all sizes and sectors.   

Also, R&D tax credits have few barriers to entry beyond the claim application. For example, if your client has received other grants it will not prevent them from claiming R&D tax credits. The only requirement is that the grant did not fund any of the R&D work.

However, your client must be aware of HMRC’s definitions of R&D before they make their claim. Read about the work that qualifies as R&D here.

2. They are visible within your client’s accounts

For SMEs, R&D tax credits are below the line, meaning they are a benefit shown in your client’s income statement. This means they are easily traceable when it comes to calculating cash flow. For companies claiming through the RDEC scheme though, the benefit is visible above the line. This means it is taxable and reflects positively on your client’s gross profit.

Additional info of note

As R&D tax credits are only claimable on projects within your client’s last two accounting periods, they could be waiting months to receive the financial benefit. This is worth taking into account if they require the funds within a short time frame. As their accountant, it may therefore be worth discussing shortening an accounting period. Although this will have other implications for the business, the cash flow benefit may take precedent.

The cash flow benefit offered by R&D tax credits can be secured with the help of advance assurance. This allows companies who are claiming R&D tax credits for the first time to guarantee their claim is successful. However, obtaining advance assurance requires another application that is separate from the claim itself.

How loss-making SMEs can benefit

It might seem counterintuitive for a loss-making company to be undertaking R&D but it can yield great cash flow benefits through R&D tax credits. Loss-making companies are able to surrender their losses in exchange for a cash credit. This credit is worth 14.5% of the total losses surrendered. Unlike traditional R&D tax credit claims, this cash credit is available as soon as the claim is processed. As a result, loss-making SMEs can correct their cash flow at short notice.

Get your client on the right track with made.simplr

With the help of made.simplr’s online R&D tax credit portal software, you can get an accurate prediction of how much your client could be benefiting. Xero integration, seamless transitioning and automation elements mean your client’s claim is in good hands. They will also be able to clearly visualise their cash flow to boot.

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