If you are one of the many exhibitors that launched a new product at PPMA, may I be one of the first to offer you huge congratulations. I’m guessing your launch is the end of an extremely long journey of development, that may have started several years ago. As part of my congratulations, may I also offer you the opportunity to recover a significant proportion of the cost of developing that new product!
It’s not often that you might hear that sort of proposal and it is an absolutely genuine one.
The UK Government are keen to reward business that are developing innovative new products and services, by allowing them to claim Research and Development Tax Credits of up to 33.35% of the eligible development costs
Despite being on the statute since 2000, it remains one of the most misunderstood and under- utilised tax reliefs. The main reason for this is that HMRC tend not to talk about it when they communicate with their “customers”. They focus more on VAT for business, Making Tax Digital, PAYE and NI on expenses and benefits, basically all of the areas where they are able to generate revenue, rather than those areas which will see a net outflow of tax. This is further complicated by the reams of legislations and rules that surround it, which tends to put off accountants from recommending to their clients that they should consider claiming.
In the last 3 years companies Small and Medium-sized companies have claimed nearly £5bn of tax relief, however a recent report by the Enterprise Research Council on “The State of Small Business Britain” https://www.enterpriseresearch.ac.uk/state-of-small-business-britain-report-2019/ identified that only 25% of the Small Business that said they were performing Research and Development, were claiming this extremely generous tax relief.
That means if you look around you at all of the companies that have launched products recently, three out of four of you won’t be getting a huge financial boost from your hard work, if you want to make sure that you aren’t one of the three, then there are some very simple things that you might be able to do:
1 – try and identify whether you have experienced technical or scientific challenges in the development of you new product.
2 – if you did work out whether the challenges were overcome as a result of a couple of quick discussions amongst the team, or through a significant process of trial and error. The former will make it harder to justify a claim, the latter will almost certainly mean there is a claim.
3 – scribble down a few notes of what the team have done and on any other projects that you might have had on the go that met the same criteria.
4 – visit https://calendly.com/simon-bulteel/15min/ to book a free no-obligation phone call with our director and Experian and Enterprise Nation Top 50 Advisor for 2018, Simon Bulteel, to discuss your projects potential eligibility; or visit the website https://www.coodentaxconsulting.co.uk and click on the “Contact Us” text to leave us a message and we’ll get in touch with you directly.
Research and Development Tax Relief is not a dodgy tax avoidance scheme, it has been legislated for by government and is overseen by HM Revenue and Customs, you can visit their manual at https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird80000
We’ve worked with a number of companies developing food and drink products, companies developing products that are used by the food and beverage industry, a specialist food dryer manufacturer, companies specializing in packaging and general manufacturing businesses; we are well placed to support your claim.
One of the best things about the tax relief is that you are able to look at your current accounting period and normally the previous two accounting periods. That means even if you’ve never claimed and you’ve been working on your project for the last two years, you will still be able to claim for all of the eligible costs that you have incurred.
In summary, if you have launched or are launching a new, or improved product, now is the best time to start your Research and Development Tax Relief claim, the challenges will still be fresh in your team’s minds and you’ll be able to celebrate both a successful launch and in 3 or 4 months a successful Tax Relief claim, that might pay out up to 33.35% of your eligible development costs.