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The conflict in the Middle East and the challenges to the global supply of oil are having a major impact on businesses around the world.
Many innovative businesses in the UK will now be facing steeper energy costs, which can be deeply problematic if your research requires more power.
This is our reassurance to you that energy costs can be part of an R&D tax relief claim and we will continue to help you include valid costs in your next claim.
How will my energy costs be included in my R&D tax relief claim?
We will have included your energy costs in previous claims, but this might not have attracted your attention much before now.
Falling under the broader umbrella of consumable costs, the cost of fuel, energy and water can all be included in an R&D tax relief claim.
In fact, refreshing your understanding of the full scope of consumable costs may be more important now that global supply chains are being disrupted.
If something is irreversibly altered or destroyed through the process of R&D and is not then sold commercially, it is considered a valid consumable cost.
The price of parts and supplies is likely to increase along with the price of energy, so knowing how to incorporate these expenses into an R&D tax relief claim could help you take greater financial risks.
If you do receive your R&D tax relief claim, those funds could be vital in offsetting some of the rising costs that would otherwise prevent your business from continuing to seek new advances.
How do I improve cost handling in an R&D tax relief claim?
You will know by now that we are always keen to point out better ways of managing your records so that we have a stronger starting position for your next R&D tax relief claim.
As energy costs rise and you find yourself more concerned with representing the true qualifying expenditure, you may want to move away from apportioned costs even as HMRC continue to accept them.
We can help you with this, as there are instances when having a more detailed breakdown of energy use and consumable costs can be helpful for an R&D tax relief claim.
As only the energy used for R&D can be included in an R&D tax relief claim, HMRC may have questions if your energy consumption is above what would be expected.
If HMRC do launch an enquiry and target your energy expenditure, we will defend the claim as we would any other qualifying expenditure we have included.
Our technical narrative will have highlighted why your consumable costs, including energy, have been higher than average, but it may still be necessary to offer a fresh explanation for HMRC.
The real strength of our ongoing work together is that we can get to know your R&D and you can know what to expect from the process.
If you are likely to be affected by rising consumable costs, then rest assured that we will help you handle this with your R&D tax relief claim.
We would also be able to support others working in your sector if you know that they are struggling with these costs but lack the support of a trusted R&D tax consultant. Whether you are looking to recommend our services to a peer or get started on your next R&D tax relief claim, get in touch today!
Adam Bointon is a Technical Director specialising in R&D Tax Credits for SMEs in manufacturing and software sectors. With over 15 years’ experience, he works closely with businesses to identify qualifying R&D activities and prepare clear, compliant claims. He combines technical expertise with a strong understanding of economics and finance to support successful outcomes. Adam also contributes to industry webinars and CPD sessions, sharing insights on R&D tax relief and HMRC requirements.
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