Encourage Your Clients To Make A Fast, Hassle-free R&D Tax Credit Claim Using The Tax Cloud Portal
Now more than ever, companies are turning to their trusted business accountants to help with the financial strain of COVID-19. Despite the government’s raft of unprecedented financial measures to assist businesses and individuals during the outbreak, the stress levels for many business owners remains high.
What is the R&D Tax Credits scheme and how does it apply to my clients?
A healthy cash flow is critical to all businesses, particularly in these challenging times. The R&D Tax Credits scheme was set up in the early 2000s to support enterprising companies that have undertaken growth-enhancing innovative technological or scientific projects. All sizes of company can benefit, regardless of industry, making the scheme a lifeline for SMEs in particular.
The scope of eligible projects is very broad, so many of your clients may qualify without even realising it. Relief is offered either as a discount on a company’s Corporation Tax to reflect R&D expenditure, or as a cash lump sum for loss-making companies.
In a nutshell, if your client’s company is taking a risk by innovating, improving, or developing a product, service or process then R&D Tax Credit relief is likely to follow.
The important thing is that a scientific or technological uncertainty is addressed which couldn’t easily be solved by a professional in the field. If the result of the project is therefore unclear from the outset, then your client may well eligible - regardless of whether the work was actually successful or not.
What is the Tax Cloud portal and how does it work?
The Tax Cloud portal is a cost-effective, fully guided online tool that helps to create a high quality, optimised R&D Tax Credit claim. It’s divided into two sections, one for businesses and one for accountants, so clients can either log in to complete their application themselves, or you can do it for them.
Once you’ve signed up, Tax Cloud will automatically verify your client’s business details through Companies House. You, or they, can then use the Tax Cloud forms to provide information about the R&D projects and the expenditure they’ve incurred. Along the way, the Myriad Associates’ experts will review the claim as it progresses and give recommendations and feedback where necessary. Once the claim is complete, the Tax Cloud portal then extracts all the project details to create an R&D Tax Credits claim report that’s ready for submission to HMRC.
Why should I encourage my clients to use it?
The Tax Cloud portal is completely self-service, making it an efficient, great value way of submitting a watertight claim to HMRC. The platform itself was designed with both businesses and accountants in mind, saving time and hassle. It means you and your clients can work at your own pace, whilst being supported by Myriad’s team R&D specialists if any questions arise.
R&D tax consultancy rates are typically around 20% of any tax credit payable or Corporation Tax refund. However, as the Tax Cloud portal is self-service fees work out much cheaper (see our recent blog about Tax Cloud reduced pricing).
Additionally, use of the Tax Cloud requires no upfront fee; payment is only taken once a claim has been processed by HMRC.
What activities can be included in an R&D Tax Credits claim?
There are a wide range of activities that can form part of a claim for R&D Tax Credits. They include (but are not limited to):
- Defining technical or scientific objectives
- Undergoing feasibility studies
- Identifying a specific scientific or technological uncertainty
- Understanding what competing technologies already exist and what their limitations are
- Designing or developing a new product, process or service from scratch
- Substantially changing or upgrading a product, process or service that already exists
- Developing and testing prototypes
There are certain indirect supporting activities that may also be eligible for the relief, for example:
- Finance, administration and personnel services specifically required to support R&D activities
- Training to facilitate R&D work
What costs are eligible for R&D tax credits?
Again, there are all sorts of costs that can be included in R&D Tax Credit claims, but main ones include:
- Staff costs, such as wages, reimbursed expenses, and employer’s pension contributions and NICs
- Payments relating to externally provided workers and agency workers
- Certain software costs
- Payments made to freelancers and subcontractors
- Cost relating to consumables that were used up or transformed specifically in the R&D process. This would be things like fuel, water and materials
See how much your client can claim
An integral part of the portal, the Tax Cloud calculator is a fast, easy way of using your client’s own figures to see how much they could save on their Corporation Tax right now. Give it a try!
Do one or more of your clients fit the bill?
If they’ve undergone innovative projects then yes, they probably do! But how much a company can claim depends on two key things: whether they have previously received state aid, and what their size and turnover is. SMEs typically need to claim under the SME branch of the scheme, whereas larger companies should claim under RDEC. For help with this, we’ve put together a blog on the differences between the SME scheme and RDEC which should prove useful.
Get in touch to see how the R&D tax experts at Tax Cloud can work alongside you
R&D Tax Credits can make a massive difference to companies up and down the country and there’s no better time than now to claim. But bear in mind, this is a highly niche tax area and even for the most experienced and competent accountants, it’s easy to make a mistake. Not only is HMRC very strict about what the figures and technical narrative need to include, the guidelines around R&D tax relief change regularly too. This is why it’s so important to use the Tax Cloud portal, and to get in touch with our friendly team if you or your clients need any help along the way. Simply use our contact page or call 0207 360 4437.