R&D tax credits – a critical cash flow injection

Monday, 13 April 2020

Each year, EQ Accountants come across more businesses who, whilst eligible, still do not claim for R&D tax credits, missing a valuable opportunity to increase their cash flow.  With the famous Scots’ modesty often getting in the way.  Right now, it is critical that businesses do all they can to get through the current circumstances and R&D tax credits can provide that much needed cash flow injection. 

A quick reminder of the basic eligibility criteria: 

  1. You must trade as a limited company
  2. You must incur qualifying costs, typically salaries, materials and subcontractors
  3. You must be seeking to make an advancement in technology (whether successful or otherwise)
  4. You must have separately identifiable projects

Tax Partner in Glenrothes, Ross Oliphant discusses, “The Government has provided a package of support to assist businesses during this unprecedented and challenging time.   R&D tax relief is not new but is just as valuable to companies and our direct contacts with HMRC have confirmed that they are working at pace to pay out successful claims. On 27 March 2020, one of our multi-disciplined engineering clients called to advise that they had received their refund from HMRC of £80k as a result of a R&D claim submitted at the start of March and wanted to thank the EQ R&D team for encouraging the claim to be made.  The client received this cash inflow in the same week that Boris Johnson announced greater social distancing measures with more businesses starting to halt operations and the company’s immediate future looked very uncertain. No one could have forecast the current position that the UK finds itself in.  However, while lots are forecasting on the Coronavirus Business Interruption Loan Scheme, the Business Support Fund from local councils and various other tax deferrals, they should not forget about the permanent inflow of cash that can be achieved by making an R&D claim”.

Claims may require only 3 to 5 hours of your time and can be done largely over the phone with the likely result of significant tax refunds. EQ do not tie you into contracts and will do as much or as little as required to help businesses, the important point being to make a claim to generate cash flow.

Do NOT simply assume this does not apply to you. To find out more, and to assess your eligibility, just give Ross a call on 01592 630055 or e mail Ross at [email protected].  

To read more about R&D tax credits, visit www.eqtaxperts.com/tax-services/rd