It’s more important than ever that UK companies and entrepreneurs invest heavily in innovation, but many small businesses and aspiring professionals are messing up their R&D tax claims at a record pace. Despite the fact that changes ushered in by Brexit and GDPR will soon be taking ahold of the British marketplace, many in the UK simply find the tax system too convoluted to effectively make a claim, and keep making the same mistakes over and over.
Here’s why you probably messed up your last R&D tax claim, the common mistakes that are besetting companies around the country, and how you can file a proper claim to get the funds you need.
Every company is unique
The most glaringly obvious mistake made by too many in the UK is the belief that there’s a one-size-fits-all solution to tax claims. As a matter of fact, every company is unique, and needs to approach an R&D tax claim differently. Whether you get your R&D tax claim could very well be decided by how effectively you make the case that your company is a true innovator, for instance, but many business owners fall into the same old rut of failing to distinguish their legitimate claims from frivolous ones.
The UK’s tax relief scheme for innovative companies is simply too important to pass up, however. If you’re failing to leverage R&D tax claims for the benefit of your business, you’re seriously disadvantaged in the marketplace. After all, the full impact of R&D tax claims has seen billions of pounds shelled out by the government in order to facilitate innovation, with hundreds of thousands of companies having already filed claims. There are many ways to mess up attaining an R&D tax claim, but the worst way is for a business to never file for one at all, or to be ignorant of the fact that it’s eligible for one.
Failed projects, for instance, are still suitable for R&D tax credits. Many company managers and business owners nonetheless think that only successful projects have a chance of earning a credit. If your company has a failed innovative project sitting on the backburner, you may be eligible for additional tax credits that you weren’t aware of. Do a full review of all the projects under your company’ management to decisively determine whether you have projects that can collect tax credits, even and especially if they were failures.
Perhaps the biggest mistake made by many when it comes to filing R&D tax claims is poor record keeping. Countless claims have been shot down by the relevant authorities because they were backed up only by shoddy records; if your company doesn’t have its record keeping under control, your R&D tax claim is essentially doomed to fail from the start.
Mastering the R&D filing process
First and foremost, if you really want to file a successfully R&D tax claim, review your bookkeeping operations immediately. If your record keeping is all over the map, consider your chances at a tax credit shot. Keeping a careful track of staff costs and payroll, too, is a vitally important step of any good record keeping process when it comes to trying to secure a future R&D tax claim.
After you’ve mastered the process of keeping meticulous records and have guaranteed that you’re not missing out on any potential claims, you should review other common missteps to make sure that your claim has as large a chance as possible at success by looking at free background checks. Many firms try to go the R&D tax credit filing process alone, for instance, when relying on the help of a dedicated professional, even if they’re an outside hire, can greatly expedite the process. If your business is on a narrow timeline, an outsourced expert might be the boost you need to get your R&D tax claim sooner rather than later.
The benefits of hiring a dedicated R&D tax credit professional are varied, but the biggest benefit is that they’re often intimately familiar with the inspection process relied upon by HMRC to validate your company’s claim. Thus, you have a significantly higher chance of acing the filing and inspection portion of receiving a tax claim for innovative purposes.
Not all companies can rely on an outsourced expert, however, and those that can’t shouldn’t think they’re doomed to failure with their R&D tax claims. As long as there are no problems in your records, your staff members are familiar with their responsibilities, and your company has a legitimate project in need of funding, you’re highly likely to get some help shouldering the cost of innovation. Above all else, never rush the process; many business owners stumble when it comes to filing an R&D claim because they’re in a frantic rush. Take your time and review the common mistakes, and you’ll secure a lucrative claim in no time.