You might also be interested in
Replies (21)
Please login or register to join the discussion.
R & D claims
Thanks for the article. I'm engaged in my first such claim and found the content very useful.
I am amazed that there have been no posts on this subject. Either you (Robert) explained it so well that the need for clarification is obviated or it's an indication of how little R&D is going off that accountants are having to deal with. The latter wouldn't bode well for long term economic recovery.
Sadly it's the latter
I've been doing R&D claims for clients over the past few years and the one thing I keep hearing is "Why hasn't our accountant told us about this before?"
The answer tends to be that either their accountant doesn't know much about R&D tax relief and even those who do tend not to understand what actually qualifies as R&D, so don't bother mentioning it to their client.
I tend to focus mostly on the technical side for clients (what qualifies ? what costs can I include? etc) and let their accountant actually submit the claim but even then a lot struggle with how to fill in a CT600 to include the figures.
The Manufacturer did quite a good article on R&D and they estimated only 3% of smes in manufacturing actually claim, if that is the case then the country may be in trouble.
http://www.themanufacturer.com/articles/just-3-of-manufacturing-smes-claim-rd-tax-credit-relief/
Would anyone have a cost schedule template that I could use to submit with the Write-up?
What do they want to see with regards to the breakdown of the claim?
Any help would be great!
Thanks,
Emma
contracted out R&D
Does expenditure on contracted out R&D (s1053) qualifies for tax credits, and how credits are given?
Thank you in advance for comments on this topic.
If you are an SME, then put simply yes, but there are some rules regarding your relationship with the sub-contractor.
The credits can either be a loss to be carried forward against future corporation tax liabilities or as a refund paid directly into your bank account, or a cheque.
This will all depend on your personal circumstances though.
Contracted out
Thanks a lot for advice.
Yes my client is SME and is not connected to contractor.
I am a bit confused on a rate though. For loss C/f rate is 65 % (s 1136) additional relief, however for repayable credits (s1055) it refers to 200%, and I cannot find anywhere reference to the contrary.
Logically credits should be calculated on relievable expenditure which is 165%, however I might be wrong.
I'll try to clarify.
If you had say 100k of internal staff costs you can qualify as R&D expenditure and 100k of subcontractor costs.
The internal staff costs can be claimed at 100% and the subcontractor costs at 65%, giving you a total qualifying expenditure of £165k.
Depending on the period in question you can then uplift that by 75%, 100%, or 125%.
So assuming it's for a period from 1st April 2011 and 31st March 2012 then the uplift would be 100% and your uplifted figure would be £330k.
Thank you
[quote=merlyn]
I'll try to clarify.
If you had say 100k of internal staff costs you can qualify as R&D expenditure and 100k of subcontractor costs.
The internal staff costs can be claimed at 100% and the subcontractor costs at 65%, giving you a total qualifying expenditure of £165k.
Depending on the period in question you can then uplift that by 75%, 100%, or 125%.
So assuming it's for a period from 1st April 2011 and 31st March 2012 then the uplift would be 100% and your uplifted figure would be £330k.
Thank you for taking time to clarify. It has been a big help.
No problem at all.
My firm offer advice to clients looking to claim R&D tax relief, so if you have any other questions more than happy to answer them.
Cheers
Paul
Sole director company.. claiming R&D time?
Anyone have any thoughts on whether I (a sole director ltd company) could claim R&D relief on research work?
I'm in the process of launching a new software product - as such nearly 2 years of research has gone into the making of it to date, with a lot more internal development work starting to stack up.
While the software platform will eventually form the basis of a new revenue stream it wont actually ever be paid for at anything like the development effort, let alone the R&D, that has gone into it.
Detailed records & timesheets have been kept throughout purely as I record all my time to see where my efforts are going - but wondering if a hourly rate could be applied to this and some tax relief claimed.
The business is a going concern and profitable so we certainly meet that criteria. Appreciate any input.
Cost Schedule Template...
The best cost schedule template is simply from HMRC's website and the R&D pages, it lists the costs that are eligible. My template matches that. I would suggest it is beneficial to add a summary of the wages and salaries and the details of the apportionment of each employee's time involved in the R&D projects as you will need the total of R&D wages and salaries as a means of apportioning software and utility costs. Normally I would add a breakdown of the costs per project! Would be happy to help.
R&D claims
Very helpful article.
Can you explain if R&D only applies to manufacturing or can a Food, Drink and Tobacco wholesaler like our company that invests in new technology to develop its buying & selling processes qualify for R&D ?
R&D can apply to any company subject to Corporation Tax (so limited, PLC etc.).
So can apply to a variety of industries and a number of the companies we have helped claim R&D tax relief are in sectors not traditionaly associated with R&D, but as they have undertaken projects such as software development to support their back off, they have been able to make a successful claim.
HMRC have now started the advanced assurance scheme where you can fill in their online form and then an inspector will contact you to discuss if your project(s) would qualify and if so they will pre-approve your claim. There are of course some caveats in terms of turnover and number of staff, but is worth a look in the first instance.
Do the costs incurred on Maintenance &Support for software programs used by R&D teams qualify for R&D tax relief?
It would need to be project-specific, rather than a cost attributable to generic R&D. Subject to that it could be a qualifying indirect activity.
I am trawling through the HMRC website, surprisingly with little joy. I have noticed that there are 2 rates to enhance expenditure, 130% and 230%. Does anybody know the criteria for each rate please? I have a client who may have small amount of qualifying expenditure and 230% would make it a viable claim!
130% rates applies to Large company scheme
230% rate applies to SME scheme
Please refer to the HMRC website on the criteria of eligibility for each of these schemes.
Also note that there are few exemptions: for example projects for external clients done by SME and projects you have received notified state aid for can only qualify under LC scheme.
Hope this helps.
Also check out this blog http://granttree.co.uk/tax_credits/
I used it for writing the report http://granttree.co.uk/how-to-nail-the-technical-narrative-in-an-rd-tax/
but it is full of advice how to go around making and R&D claim.
130% rates applies to Large company scheme
230% rate applies to SME scheme
Please refer to the HMRC website on the criteria of eligibility for each of these schemes.
Also note that there are few exemptions: for example projects for external clients done by SME and projects you have received notified state aid for can only qualify under LC scheme.
Hope this helps.
Those are the SME and large company rates (since replaced with the ATL tax credit).
For the 230% SME rate a company must have less than 100 million euro turnover, less than 500 employees and less than then 86 million euros on the balance sheet.
The info is available here
https://www.gov.uk/guidance/corporation-tax-research-and-development-tax...