R&D Tax Credits: Can My Client Reapply?
The R&D Tax Credits scheme is complex and some claimants will need to reapply. Don’t let your client make the same mistake twice.
Spot the pitfalls
We hear this one a lot. Your client has previously applied for R&D Tax Credits but was unsuccessful. So can they apply again with a new project?
The simple answer is yes. Either they can make a new application for the same project, or they can apply for a totally new project. But the absolutely crucial thing to note here is not to make the same mistake again. This is where R&D tax and grant experts like us at Myriad Associates are essential, as we can work with both you and your client to ensure success.
Don’t let your client get caught out again
There are several common mistakes with R&D Tax Credit claims that come up time and again. It’s these errors that can lead to claims being rejected by HMRC, not just once but repeatedly. So in order to make sure your clients don’t fall into the numerous pitfalls when they reapply, we’ve put together some tips:
1. Claims must not include projects that actually ineligible
Sometimes projects that seem ideal for an R&D Tax Credits claim actually aren’t eligible at all - and vice versa. The point is that the relief is offered only on projects that resolve a particular technological or scientific uncertainty within the field the company operates. Therefore any costs incurred in peripheries like market research, and the manufacture or distribution of goods and services doesn’t count. We will work with you in untangling whether a project qualifies or not and identify where the scientific and technological uncertainties begin and end.
2. Only employees should be included in staffing costs
This means only people that work directly for your client’s company and hold a written contract to that effect. However, payments made to certain externally provided workers, including freelancers and subcontractors may be included - again we can advise you on this where necessary.
3. It must not be assumed that an SME will always claim using the SME scheme
The SME branch of the R&D Tax Credits scheme is more generous than the larger company scheme RDEC. However, there are certain cases when a smaller company will be ineligible for the SME scheme, for example where they are in receipt of State Aid. Again, our specialists can work with you to ascertain which branch of the scheme your client should use so there are no nasty surprises later on.
At this point we also recommend reading our recent blog: R&D Tax Credits: What's The Difference Between The SME Scheme And RDEC?
4. Be careful with sub-contracted expenditure
As we’ve mentioned above, it is possible to claim some sub-contractor costs in an R&D Tax Credits claim - but not all of them. We can work with you to ascertain the required accounting method for sub-contracted expenditure. By discussing your client’s R&D project in detail, we can then ascertain which parts of it were fulfilled by other people on their behalf, and work out the applicable rate of relief due (if any).
5. Work with an experienced R&D tax specialist
As you’ll know only too well, being a company accountant involves a huge range of demands on your time and brain space. This in turn can make tackling extra jobs like R&D tax relief a major headache.
The fact is, claiming R&D Tax Credits is no easy task. It’s often complex and monotonous, and the legal goalposts tend to move often. This means it’s all too easy to make a mistake, and even the smallest of errors are highly likely to be spotted by HMRC. Substantial delays and financial costs may then follow, which your client won’t exactly thank you for.
At Myriad Associates we not only have the skills, experience and in-depth knowledge to work with you and your client on their R&D Tax Credits claim, but we can optimise it too. We only work in R&D-related tax, grants and funding, and we’re proud of our 100% success rate.
We basically take the hassle out of advising your clients on their R&D tax affairs for the very best outcomes - so there’s one less thing on your to-do list.
This is by no means an exhaustive list - and getting it wrong can be disastrous
Even if you’ve worked with clients on a previous claim, there’s no guarantee that subsequent claims will be successful. Some businesses - and accountants - assume that because they’ve been successful before, they simply need to retrace their steps and R&D Tax Credits will follow. But sadly this is rarely the case, and mistakes can be incredibly costly. Not only can inaccuracies lead to an expensive and potentially stressful HMRC enquiry, they may also wish to delve deeper into your client’s more general tax affairs. Additionally, it is certainly not unheard of for HMRC to apply hefty fines and penalties, even with the most innocent of errors.
Additionally, there’s no way you want to risk your firm’s reputation by seeing a client suffer repeated rejection. This again is why we so strongly recommend working with us at Myriad Associates, as we can work with you and your client on the finer minutiae of their R&D Tax Credits claim. We’ll identify any issues before they get as far as HMRC, and if any questions are raised we have the knowledge and experience to answer them on your/your client’s behalf.
Let us take the strain when it comes to all things R&D - it could well bring a much-needed financial boost for your clients in what is proving to be a difficult year.
Offer your clients a more complete R&D tax service
Get in touch with our expert team of R&D funding specialists on 0207 118 6045 or use our contact page and leave us a message. See how we can help you to help your clients with their R&D tax claims today.