The revenue recently released R&D data for the previous financial year which shows that R&D claims continue to provide valuable benefits to companies undertaking R&D. The total amount of R&D support claimed by businesses has increased by 25% bringing totals for 2016/17 to £3.7bn, to hit another record high last year. (more…)
The revenue recently released R&D data for the previous financial year that shows claims increased from £1 billion in 2014/15 to hit another record high last year.
The total number of claims for R&D credits in 2015/16 also rose to 26,225, with SMEs accounting for 21,865 of that figure – up 22% on 2014/15. (more…)
The basic criteria to qualify as R&D relies on the project seeking to achieve a scientific or technological advance while attempting to overcome scientific or technological uncertainty. Qualifying R&D must also be:
The government is concerned that many small companies are missing out on generous Research and Development (R&D) tax credits. For the last year HMRC have been offering companies an advance assurance scheme to check whether or not their activities qualify before they make a claim. So far over 200 applications for advance assurance have been made.
There is a general misconception that R&D involves scientists in white coats, but it should be remembered that R&D includes the development or improvement of a product or process. This means that some of the work by your engineers or technical staff may qualify as R&D. For Small and Medium-sized Enterprises (SMEs) the tax credit is 230% of the expenditure on qualifying R&D, and where the company incurs a trading loss, HMRC will provide an immediate cash refund rather than waiting until there is a profit in a future period.
Welsh companies are beginning to make ground on their UK rivals in taking advantage of vital research and development tax relief schemes, according to specialist tax adviser Denise Roberts fromMHA Broomfield and Alexander.
The latest statistics from HM Revenue and Customs show that 675 claims for research and development tax relief were made by companies registered in Wales during the 2014-15 tax year. Overall, this represents a 16% increase from the previous tax year and equates to approximately £10m more being claimed as a result, returning around £35m to companies registered in Wales.
Last chance to sign up to the Existing Regime and potential tax rate of 10%.
The existing scheme will be closed to all new entrants from 1st July 2016. If you have already elected in to the scheme you will be able to continue to enjoy the existing benefits until 1st July 2021. However, if this is something that you have not yet considered then now is the time to contact us and speak to our Patent Box and R&D Tax Credit specialists.
The new rules will effectively reduce the IP profit that will qualify for the special rate of 10% unless the majority of the IP research and development activity has been carried out by the company itself. It will also increase the record keeping and administrative costs of identifying the relevant IP income and costs.
Designed to promote and enhance the UK’s position as a world leader in patented technologies, encourage innovation and keep development, manufacture and exploitation in the UK; The Patent Box has been widely welcomed by the corporate world – especially in the manufacturing and technology sectors. GlaxoSmithKline attributed to the Patent Box its additional investment of £500 million in manufacturing in the UK, along with the creation of 1,000 new jobs and the construction of a new factory.
Since its introduction in 2013, Patent Box has been encouraging businesses to commercialise their patents and R&D in the UK to benefit from a lower rate of tax. It allows a 10% tax rate on profits derived from any products that incorporate patents, compared to the standard corporate tax rate of 20%.
However, internationally, the regime has not been quite so popular. It has been subject to intense scrutiny as to whether it may be considered a harmful tax measure under the EU Code of Conduct for business taxation. Germany (among others) accused the regime of promoting unfair (or) harmful trade competition by being excessively generous. It was further argued that the regime was encouraging companies to artificially shift their profits to the UK to the detriment of other EU members’ tax collections.
Broomfield & Alexander’s very own Mike Fenwick and Denise Roberts will be at Venturefest Wales, Swalec Stadium, Cardiff on Tuesday 29th September 2015.
Venturefest Wales 2015 is a free event that brings entrepreneurs, innovators and investors together to inspire business growth through collaboration. Make new connections while you visit the unique mix of workshops featuring inspirational speakers and one-to-one sessions with experts.
Mike will be available in the ‘Meet the Experts’ area for 121 sessions on Grants for Entrepreneurs, if you wish to discuss your plans, potential eligibility for R&D, capital expenditure and job creation grants, as well as discuss the importance of match funding and project presentation to provide you with the best possible chance to access funding. Match funding sources such as debt and equity can form part of an overall funding package and a number of competing issues may need to be considered so come and discuss your options.
Denise will be leading a workshop entitled, Tax options for innovative companies: maximising your tax reliefs.
Businesses are continuing to operate in a challenging market with increasing pressures on margins. However, innovative businesses who are driving forward with investment in the development of new/improved products, applications, or processes have found that they can use tax reliefs to improve their margins.
Tax reliefs such as R&D Tax Credits and Patent Box are much publicised but come along to this workshop and find out how to really maximise your claims and find out about the wide range of type of claims that can be made.
HMRC want your evidence of the impact on your business of proposed changes to the R&D Tax Relief to exclude materials from R&D claims
On 29th January MHA Broomfield Alexander, and our R&D Advisory Group colleagues from MHA, had a very helpful meeting in London with a senior central policy adviser from HMRC in regard to two major changes proposed to the R&D Tax Relief regime:
- The removal of materials as a qualifying cost in R&D claims where those materials are included in an item which is then sold on to a customer
- The Advance Assurance process which will be introduced (which we think is a good idea and which we support provided that it ensures that applicants ask informed questions so they get the right answers!)
In both cases, HMRC are actively seeking feedback about why they should, or should not, make the changes proposed.
Is your business an engineering or manufacturing company which produces “bespoke” or “first in class” products? If so, we need your help to try to persuade HMRC not to implement a change which could adversely affect your business by completing our brief survey and giving us your feedback
In the Autumn Statement HMRC announced that they propose to change the R&D tax relief claims system, to exclude the cost of materials included in the bespoke items (or first in class items) from any R&D Tax Relief claims from 1 April 2015 if those items are then sold to customers.
Under the current law, it is possible to include within R&D Tax Relief claims the costs of materials consumed in the development process which are then included in the item sold.
For development projects relating to high value items such as offshore equipment, vehicles or other plant and machinery which is developed and then sold these costs can make up a sizeable part of the R&D Tax Relief claims made by engineering companies.