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Welsh Companies Missing Out by Not Understanding R&D Tax Credits

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Figures released earlier this autumn by HMRC show that once again Welsh businesses are under-represented in the figures for companies claiming R&D tax credits.

In the 2016-17 tax year, a total of 1,245 claims for the relief were made by Welsh companies. This is up on the previous year; however, Welsh companies were starting from a very low position to begin with.  Despite the increase, the number of Welsh companies claiming as a percentage of the UK total remains about the same at 3.15%.

This under-representation may be due to the fact that many businesses do not bother to claim because they don’t think they will qualify. One of the main reasons for this may be that businesses think they can only claim if they are a science or technology company, or working in a science or technology field.

But this is to misunderstand the way the relief works. It’s true that the research has to be scientific or technological in nature. But this simply means, for example, that it can’t be a piece of market research or something else that is more psychologically or sociologically based.

If companies are failing to claim because they don’t understand the scheme, they could be missing out on some real and substantial help from the taxman. Last year Welsh companies claimed £70m in tax credits on total R&D expenditure of £410m.

That works out as an average claim of £56,224. Looking at claims under the SME scheme alone the average claim was still a very healthy £46,296.

It doesn’t matter what sector you’re working in or what the nature of the product or service you supply, if the research has a scientific or technological character it could qualify for an R&D tax credit.

The Government’s own figures reveal the truth of that. While the largest number of claims were in the expected sectors of manufacturing, information and communication and professional, scientific and technical, claims were also recognised in every other sector apart from public administration.

So large numbers of claims were also accepted in the wholesale and retail trades, construction, and admin and support services.

But claims were also accepted in less obvious sectors such as agriculture, forestry and fishing; financial and insurance; arts, entertainment and recreation; accommodation and food; and education.

In fact, whatever sector you’re operating in, if your company is doing some R&D aimed at resolving some scientific or technological uncertainty that advances industry-wide knowledge, there’s a good chance that it will qualify for R&D tax credits.

But don’t try to guess yourself. If in doubt, ask an R&D tax credits expert.

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Lime R&D is not your average tax consultancy. As the only firm of Chartered Tax Advisers dedicated to R&D tax credits in Wales, we pride ourselves on our refreshingly unique approach to Research and Development (R&D) tax credits which makes the claim process simple and straightforward.

We specialise exclusively in R&D tax credits – this level of specialism provides us with a more thorough understanding of the tax legislation, HMRC practice and how it could impact your business. Based in South Wales, we are passionate about helping Welsh companies from all sectors successfully claim what they are entitled to, which often equates to tens of thousands of pounds or more.

We appreciate that the claim process can be a little overwhelming. There is so much information available that it is hard to know where to begin. Our Chartered Tax Advisers provide a complete R&D service ensuring your claim is fully optimised, providing you with peace of mind and confidence, whatever your industry, size or structure.

More companies qualify for the relief than you may first think. You do not need to be undertaking cutting edge research to make a claim – this is the biggest misconception surrounding R&D tax credits. You simply need to demonstrate that your company has undertaken work which was not routine or easy to achieve. Our experienced advisers can help pull all the necessary information together and present it in the correct way.

All this can be done risk free – if you do not receive a benefit then Lime R&D won’t charge you anything! Contact us to speak to one of our specialist Chartered Tax Advisors.

 

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