As R&D tax relief claims have become more complicated to claim, there is a question about whether they are worth claiming at all.
There may be some accountants or innovative businesses that do not engage with R&D tax relief claims for fear that the effort required to submit the claim is not worth the eventual payout.
We know that R&D tax relief claims are worth it and want to help you understand why that is the case.
Are R&D tax relief claims difficult to submit?
One thing is definitely true and that is R&D tax relief claims are harder to submit now than they were in the past.
This is not inherently a bad thing, as the increased challenge with submissions, brought about by the introduction of the Additional Information Form (AIF) and the Advanced Notification Form (ANF), is designed to dissuade dishonest parties from making fraudulent claims.
The difficulty faced in putting together an R&D tax relief claim is matched by the risk of enquiry, which means even fully compliant claims may face delays while the matter is resolved with a HM Revenue and Customs (HMRC) agent digging deeper into the work conducted.
Having to potentially provide more evidence on top of that which had already been submitted can be an intensive process, especially if it is handled by those less confident in managing R&D tax relief claims.
Is an R&D tax relief claim worth the effort?
The answer will primarily depend on the level of qualifying expenditure that is being considered by the R&D tax relief claim.
It is entirely possible to conduct some R&D work but spend so little money in achieving an advance that a claim is not within the best interests of any party.
However, that is quite a rare occurrence, particularly for larger businesses, and most R&D work is likely to be worth an R&D tax relief claim.
The scope of recovery that can recoup some of the costs of material, wages, and even energy makes it a helpful way to offset some of the funds set aside for innovative work.
It is worth remembering that no routine work can be submitted for an R&D tax relief claim and therefore it should not be viewed as a shortcut to easy money to tackle rising operational costs.
The money is designed to help fund innovation and there is evidence to suggest that it does achieve this goal.
A recent study found that R&D tax credits are associated with product and process innovation, and also radical innovation of both types.
The best way to ensure that R&D tax relief claims are worth it for an innovative business is to handle them with full compliance and confidence.
We find that small companies appreciate a £5,000 credit more than a large company with a £50,000 credit but the value is ultimately determined by how well a business is able to reinvest the funds.
As R&D tax consultants, we specialise in making sure that R&D tax relief claims meet the criteria for HMRC while being optimised to ensure maximal returns for the innovative business.
We also work to defend any eligible R&D tax relief claim for enquiries so that vital funds do not get wrongly withheld.
