Q. "We don't have a claim" This is a common misconception that is fuelled by several factors, one of which is that there is no simple, one-size-fits-all checklist in place to determine what constitutes R&D for the purposes of the relief. Added to this is the fact that many organisations do not view their R&D as R&D because it forms part of their day-to-day work. For example, many manufacturers believe they are not eligible for relief as they do not employ an R&D team in white lab coats. In reality, the vast majority of R&D tax relief claims relate to actual commercial development, meaning the ongoing process of continual improvement of products and processes to improve quality, cost or efficiency.

Q. "What can I include in a claim" From pens to pensions, let us guide you in setting up your claim: staff costs, management costs, materials, sub-contractors, pensions, consumable items, utilities Etc.

Q."The system is too complicated for us to claim" Many SME manufacturing companies feel overwhelmed by the complex definition of R&D, which underpins the relief, and simply do not have the resources available to get up to speed on this specialist area of taxation. It can be a challenge to get R&D tax relief on to the boardroom agenda, especially when faced with the misconception that the industry ‘doesn’t do much R&D'. However, our experience over the past 10 years means we have both the Accounting and Technical know-how to manage the process for the businesses we work with. This ensures the maximum return for a minimal amount of time from the key people within your business.

Q. "Tax relief involves aggressive tax planning" This is an extremely common misconception that is often raised in relation to R&D tax relief. The debate has also been further intensified with global news headlines involving corporate tax avoidance and evasion and the gap between what is legal and what is morally acceptable continuing to be a hot topic of discussion. In reality, many manufacturing businesses do not realise there is a huge distinction to be made between tax planning, where a structure or transaction is developed that results in a favourable tax position, and incentives such as R&D tax relief – a scheme designed by the Government to encourage and reward innovative, hard-working companies. Manufacturing companies do need to make sure they meet the relevant criteria and follow the rules, but if their claim is robust, they will be able to access the relief they are entitled to.

Q. "The relief is going to be scrapped" This may have been a legitimate concern a few years ago, but successive governments from different political parties, have increased the claimable % over a 16 year period from 150% to its current 230%. This means that the incentives are not only here to stay, but have improved in generosity in recent years. The rate of relief for SMEs has increased from 175% to 230% in the past 6 years alone. The introduction of the payable tax credit for loss making small SMEs which is now at 14.5%, means the HMRC are actively promoting payment of cash credit payable to SMEs that conduct qualifying R&D activity but do not have corporation tax liabilities.
The measure will provide further incentives for small companies and start-ups to invest in R&D. It targets companies for whom risks and market failures are most pronounced. This measure is consistent with the Government’s wider objective to support small innovative companies who have high growth potential. As at 2013, nearly 100,000 claims have been made and over £9.5 billion of relief has been claimed since the R&D tax credit scheme was launched. More than 28,000 different companies have made claims under the SME scheme.