Why R&D tax portals are ideal for SMEs
For small businesses especially, claiming R&D Tax Credits is a daunting prospect. It’s a complex process, full of ever-changing legislation requiring targeted expertise.
R&D tax relief is something that frequently baffles even the most skilled and experienced of accounting professionals. This is particularly true when it comes to writing a comprehensive technical report and maximising claimable costs.
As a busy accountancy practice you may not have the time to take on R&D tax relief claims on behalf of your clients. And hiring in the skills externally may also be something that isn’t realistically (or financially) feasible.
The answer? An online, fully guided R&D tax relief claims portal like Tax Cloud.
Why does Tax Cloud stand out?
The R&D projects and tax affairs of SMEs are often relatively straightforward, so a cost-effective online tool like Tax Cloud can really fit the bill.
Following a quick (free) sign-up process, Tax Cloud automatically verifies your clients’ details through Companies House. Then (depending which partner package you choose) either yourself or your client follows each step to enter in their details, costs and figures to generate a report for HMRC. And as the Tax Cloud portal was developed by the R&D tax experts at Myriad Associates, our specialist team is on hand at every stage for advice. We’ll also check each step and offer feedback, with the next one staying ‘locked’ until the one before is checked. On completion, Tax Cloud will then submit everything to HMRC.
What are the benefits of a self-service R&D tax credit portal?
The Tax Cloud portal is completely self-service, and accessible online 24/7. There’s nothing to download, no fiddly bits of software to install and no maintenance.
Essentially, you and your clients are getting all the benefits of Myriad’s full consultancy service at a reduced price. You and/or they can work through the process at your own pace, with the full support of cost accountants, technical specialists and tax experts anytime along the way.
Depending again on which package you choose, your firm can also receive a revenue share fee of either 15% or 30%. There’s nothing to pay upfront either. When you and your clients use Tax Cloud, payment is only taken by us after their R&D Tax Credits claim has been successfully processed by HMRC. Nothing to pay up front.
£7.4 billion claimed
According to latest government statistics, around 85,000 R&D Tax Credit claims were made in the year ending March 2020 is 85,900. This represents a 16% increase from the previous year, primarily driven by a 16% rise in the number of SME R&D claims to 76,225. Overall, a staggering £7.4 billion was claimed in the same period.
So how come SMEs are still missing out?
The signs are good and SMEs up and down the country are benefitting hugely due to the generosity of the R&D Tax Credits scheme. However, despite the relief having been offered since the year 2000, far too many SMEs are still missing out or believe the myths. This is a huge missed opportunity, especially as times are economically tough right now.
The fact is, any UK company of any size and in any industry can claim for R&D Tax Credits. The main thing is that it has undertaken a project in the last two years that aimed to advance science and/or technology in the field. Many organisations actually do this already in the course of their day-to-day work, which again is why eligibility is not easy to spot.
If your client’s company has taken a risk by innovating, developing or improving a product, service or process, then R&D Tax Credits may well follow. As long as any technical or scientific challenges weren’t easily solvable by a competent professional in the field, it’s a good side the eligible R&D work has occurred.
What type of activity can be included in a claim for R&D Tax Credits?
Clearly every company and every R&D project is different. But common activities that are typically eligible for R&D Tax Credits include:
- Feasibility studies
- Defining technical objectives
- Identifying uncertainties
- Reviewing new and competing technologies
- Testing the product, software, service or system
- Analysing, designing and developing the technology
- Producing technical specification or other documents to explain and support the R&D project and advancement
- Planning and managing projects
What costs are eligible for R&D Tax Credits?
Again, there are many. However main ones include:
- Staff costs (salaries, wages, employer’s pension contributions, employer’s National Insurance contributions and reimbursed expenses)
- Agency workers/externally provided workers
- Software licence costs
- Sub-contractors/freelance workers
- Consumable items (overheads, fuel, equipment or materials used in the process of the R&D work)
Is your client’s company eligible for the SME scheme?
The R&D Tax Credits scheme is divided into two branches - the SME ‘branch’ and RDEC.
For an SME to use the SME route to a claim, it must have fewer than 500 staff as well as:
- Either a turnover of under £100 million, or,
- Gross assets of no more than £86 million
If your client’s company exceeds these thresholds then they’ll need use the large company scheme, RDEC.
It’s worth nothing too that in certain circumstances even an SME will need to use the (less generous) RDEC scheme, for example if there has previously been a claim for state aid.
Ready to see how Tax Cloud can benefit both your clients and your practice?
R&D Tax Credits are not only designed to support the company applying, but the wider economy too. For SMEs cashflow can be a critical issue, but with even the smallest claims easily adding up to thousands in tax relief there’s no better time to get your clients what they deserve.
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Tax Cloud is an R&D Tax Credits claim portal.