R&D Tax Relief & Planning

MSC R&D Paid-on-Results; Fast-Track Process; Expert Teams

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Don’t waste your investment in Innovation – maximise your R&D Tax Relief

The UK Government’s R&D Tax Relief schemes encourage and reward both SME’s and large companies for investing in innovation. They offer a vital means to cut costs and improve cash flow, whilst still keeping ahead of the competition.

In addition to R&D Tax Credits and R&D Capital Allowances, companies can now also claim r&d tax relief via the Patent Box – aimed at companies looking to exploit patented innovations.

These schemes are complex and require detailed knowledge and understanding in order to take full advantage of them. This is why the majority of companies either don’t claim or under claim. Or, worse still, over claim with no justifiable evidence in the case of an audit by HMRC.

MSC R&D takes R&D Tax Relief applications to a new level. We match the right technical and financial expertise to your business, working with your existing accountant to achieve the maximum eligible benefit from R&D Tax Relief, whilst minimising your time commitment.

Operating on a contingency basis, with no set up fees, MSC R&D has been successfully preparing claims for R&D Tax Relief since its inception in 2000.

 

R&D Tax Credits Explained

Tax-Credits

The R&D Tax Credit scheme was introduced by the government for SMEs in 2000, and extended to Large Companies in 2002. Any limited company developing new products, technology or processes may be eligible.

It is a tax relief scheme, designed as an incentive for companies developing new technology – the more qualifying development work a company does, the greater the relief it can get from its Corporation Tax bill. Even loss making companies can benefit (in terms of a “Credit”) which can be of particular importance to early stage businesses.

The scheme is one of the most attractive in the world and a company can claim retrospectively for up to 2 previous accounting years.

The benefits to a company vary according to the level and cost of development undertaken, whether it is an SME or a Large Company, and its Corporation Tax band, but it is not unusual for claimed expenditure to run into hundreds of thousands of pounds, with tax relief typically in excess of £30,000 being realised.

It is possible for a company to prepare and submit its own claims. However in order to be sure that their claim is optimised and justifiable, the company must fully understand the detail of the HMRC guidelines (a 15-part manual) and have the time, financial and technical expertise to define, quantify and support their claim.

The alternative is to use a specialist like MSC R&D.

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The Specialist Approach

The meaning of R&D in the context of R&D Tax Credits is not straightforward, and wider than most companies realise. It is not limited to the R&D department.

HMRC defines R&D as work that achieves a scientific or technological advance when scientific or technological uncertainty exists.

This can include:

  • achieving an increase in overall scientific or technological knowledge or capability
  • significantly improving products, processes, materials or services through scientific or technological development.
  • using science or technology to duplicate the effect of an existing product or process in a new or appreciably improved way.

The whole project may not qualify, only the element addressing the technological uncertainty. This is not always easy to identify but can include planning and managerial activities in some instances.

With software R&D, where development is ongoing, identifying the areas of technological uncertainty in projects is critical, as many more routine activities will not qualify.

Qualifying expenditure is not straightforward either, as there is a detailed rule base as to what qualifies and in what circumstances. In reviewing your claim, the HMRC will try to be helpful, but if you claim something to which you are clearly not entitled they may seek penalties.

This complexity is why many companies either don’t claim, or fail to claim all that they are entitled to. Claim documentation may also be technically weak and invite challenge by the HMRC.

A ‘specialist approach’ on the other hand, uses skilled financial and technical experts, and places the projects and technologies at the centre of the claim. This approach starts with the company’s technical people, talking to them in their own language, identifying all eligible projects and preparing robust claims.

This need not be particularly time consuming because it is a conversation between your technical specialists and ours, so we can quickly grasp the nature of the development and advise where the qualifying R&D occurs.

The expert market knowledge a specialist possesses can help to uncover additional qualifying expenditure. In our experience this can result in claims values being increased by up to 50%.

 


R&D Tax Relief – The MSC R&D Team Way

Tax-Credits-(1)

Paid-onResults; Fast-Track Process; Expert Teams

MSC R&D has over 20 years’ experience in helping R&D technology companies deliver profitable growth through innovation. Our knowledge of and experience of the R&D process is unrivalled, as is our expertise in raising funding and maximising tax opportunities for our clients.

We have been successfully preparing claims for R&D Tax Credits since the scheme’s inception in 2000. Our ‘fast track blitz’ processes and methodologies minimise the impact on your time and obtain optimum results for you. Normally our analysts only require one day on site.

Our team of MSC R&D accredited qualified technologists and financial experts have specific experience across a wide range of sectors, meaning we can match the right technical expertise to your business and work with your technical people and accountant to achieve the maximum eligible benefit from R&D Tax Relief.

To support our claims, our in-depth analysis is compiled into a highly detailed report with a breakdown of your entire R&D expenditure. This report not only provides concrete evidence for your claim, but also acts as a valuable resource for project managers, directors and shareholders alike. Our clients often find that our objective, expert evaluation and our broader experience in supporting technology SMEs, can fundamentally change the way they look at and approach their R&D strategy.

Our service is offered on a contingency basis, providing peace of mind for our clients.

As the policies on R&D Tax Credits inevitably change, it’s important that we work with you on an on-going basis to ensure that all future claims are within guidelines and claimed to their full potential.

 


Patent Box

Patent Box is a relief targeted at companies of all sizes seeking to exploit patented inventions and will allow them to apply a reduced rate of corporation tax to all profits relating to qualifying IP. The potential tax savings can be significant as 100% of all your product revenues potentially are included in the computation, irrespective of how large or small the actual patented component is compared to the size and cost of the overall product.

It is in addition to the R&D Tax Credit scheme, so companies can potentially benefit under both schemes.

At MSC R&D, we have the experience and expertise to help clients in the short term and long term through:

  • Evaluating and processing opportunities for benefiting from potential Patent Box tax savings
  • Reviewing current IP policy and R&D strategy, recommending future IP strategy and working with the client to implement it.

 


R&D Capital Allowances

In addition to gaining relief on revenue expenditure via the R&D Tax Credits scheme, a company may be able to claim relief for capital expenditure on R&D Tax as a capital allowance known as the ‘Research and Development Allowance’ (RDA).

This is a valuable relief allowing you to deduct 100% of your qualifying expenditure from taxable profits straight away rather than over a number of years (as is the case for non R&D expenditure). When tax rates are falling this can result in a real tax saving by reducing your profits when the tax rates are higher, as well as creating a timing advantage as tax payment is deferred.

The RDA is only of value to companies who are in a tax paying position.

MSC R&D can help clients identify and claim any eligible RDAs alongside our R&D Tax Credit service.

Don’t waste your Innovation investment – maximise your R&D Tax Relief!

 

Case Study – Spend360