R&D Tax Relief Benefits: Why Your Clients Should Claim
R&D Tax Credits can make a massive difference to your client’s company. Find out why claiming R&D Tax Credits is always a good idea.
Thousands of pounds of extra cash could be at stake
The R&D Tax Credits scheme was devised by the UK government to stimulate the economy via company innovation. A highly generous tax incentive, it allows qualifying companies engaging in R&D work to claim back either a Corporation Tax deduction or a cash credit reflecting up to 33% of the costs.
As long as your client’s company has carried out applicable R&D activities, they can apply for R&D Tax Credits, irrespective of size or sector.
Typically, applicable R&D work tends to involve creating a new product, process or service from scratch, or modifying an existing one. But remember, the amount that can be claimed depends on a number of factors, including whether your client will be claiming through the SME branch of the scheme or RDEC.
The trick is in knowing which of your clients are eligible for R&D Tax Relief
Often, clients might either assume that the work they’re doing will definitely qualify for R&D Tax Credits when it doesn’t, or wrongly presume their company (or project) is too new or too small to be eligible for R&D Tax Relief. They may have been misinformed about the scheme in the past, or worry about the risk of HMRC investigations. It’s up to you (and us!) to ascertain their eligibility and achieve the R&D Tax Relief they deserve.
The fact is the list of projects and activities that qualify for R&D tax relief is extremely broad. Although some industries are bigger claimers than others, R&D actually occurs just about everywhere.
As your client’s accountant, you’ll probably have access to most of what they need for their R&D claim, so this is where you can make a big difference to them.
How to identify claimable R&D work
Often, the biggest hurdle when identifying eligible R&D activity is working out exactly where your clients’ R&D work lies. It’s important to be proactive here: Highlight that the R&D Tax Credits scheme exists and explain to your client what the benefits of it are.
If you can, look a couple of times a year at your clients’ portfolio. Or of course, simply have a conversation with them about what their R&D plans might be.
Consider asking them the following questions:
- Is your client’s company in a very specialised or niche market?
- Are they (or have they recently) invested money in an innovative project for which the outcome was unclear?
- Are they carrying out a project that has meant taking on skilled or technical staff? (This could include subcontractors or freelancers.)
- Does their business operate in a regulated market?
- Have they taken on work that looks to make a scientific or technological discovery?
If the answer to any or all the above is ‘yes’, then the chances are that eligible R&D work is occurring. And of course, this may well lead to R&D Tax Credits.
If you’re not sure whether R&D tax relief applies to your client(s), we would be happy to speak to them on your behalf. To assess their eligibility, we’d arrange a short, no-obligation video or phone call where we would discuss, in detail, their current or planned R&D projects. We’d then provide them with an estimated value of their R&D claim and give them details about how to claim.
So, how will my clients benefit from R&D Tax Credits?
First off, there’s obviously the financial benefit. The award can mean a serious boost to cash flow, as it can be spent in any way a company sees fit. This could be in paying off debts, increasing staff salaries or even paying dividends.
However, the big thing the resultant cash can be used for is financing future growth. Indeed, this chance to plough money into further R&D work is something many company’s relish.
Other benefits of claiming R&D Tax Credits include:
- The chance to claim each year, making the extra funding regular and predictable.
- By using the Tax Cloud portal it’s very quick and straight-forward to make a claim, and the rewards can easily run into tens of thousands of pounds.
- R&D Tax Credits can make the company more attractive to investors. Regular, successful claims demonstrate a company’s commitment to future growth, innovation and success. See also our recent article: Financing R&D: How Can My Company Attract Investors?
Could your clients be missing out on a sizeable financial injection?
During the two decades of working in this field, we’ve come across many companies that have undertaken eligible R&D work but have never claimed R&D Tax Credits. This is often because the scope for claiming is so wide, and many don’t realise that their work will qualify. But not applying for R&D Tax Relief means your clients could be missing out on large amounts of extra cash.
How to construct a successful R&D Tax Credits claim for your clients
The R&D tax and funding experts at Myriad Associates developed the Tax Cloud portal back in 2017 to make the process of claiming for R&D Tax Credits easier, more accessible and smoother. Our team only deals in R&D tax relief, grants and funding. That’s all we do – we’re not in any other areas of accounting and we’re not interested in taking your clients away from you.
We work alongside accountancy firms to complement the service they already offer so that their clients can receive the very best R&D tax advice possible without having to take on extra staff in-house. The Tax Cloud portal takes the headache out of R&D tax relief claims, freeing up your time for everything else.
How the R&D Tax Cloud portal works
As your client’s accountant, you simply log in and work your way through the easy-to-follow steps to build a watertight claim on their behalf. No prior knowledge about R&D tax relief is needed, and you won’t have any worries about dealing with HMRC either: our specialists can handle that too if needed.
Alternatively, you can simply refer your client to us - for a handy 15% referral fee - and they then follow the steps to complete their claim themselves. See more about our partner package.
To find out more about the Tax Cloud portal or for general advice, call our team on 020 7360 4437 or use our contact page.