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Do you have clients with a March year-end? Don't let them miss out on a valuable cash boost

For the sake of your clients with a 31 March accounting year-end, you need to read this.

If they are an innovative business, this is their deadline for claiming an R&D tax credit for the 2015/16 accounting period. 

  • Not sure if they are innovative enough?
    Many companies and their accountants are surprised to learn that they qualify for this valuable source of funding. So, it is always worth checking.
  • What are R&D tax credits worth?
    Well, according to HMRC who administer the claims, the average R&D tax credit value to SMEs is £61,314. That’s cash that could spark the next big project, or fund the final push in creating something remarkable.

Why do you need to act now?
Companies have two years from the end of their accounting period to submit an R&D tax credit claim for qualifying expenditure they’ve incurred. So, once they hit the deadline at midnight on 31 March 2018, they can no longer recoup the money they spent on qualifying activities between 1 April 2015 and 31 March 2016.

If they have already made a claim for this period but you want to be sure they haven’t missed out on any untapped value, the same deadline applies for reviewing a claim.

You want the best for every one of your clients. So ensuring that all who are eligible for R&D tax credits receive the full value they are entitled to will be a top priority for you.

A reminder: How R&D tax credits work
R&D tax credits are a government tax incentive designed to encourage innovation in the UK. The government rewards limited companies that are innovating because it knows that doing so brings significant benefits to the wider UK economy.

As a tax incentive, R&D tax credits are only available to companies that are liable to corporation tax.

Your client also has to be undertaking R&D. If they have developed new or improved products, processes or services, they may be carrying out qualifying activity. Examples of R&D include:

  • Developing a new lighter-weight material to improve efficiency.
  • Designing a unique e-commerce platform than can personalise customer experience.
  • Creating a new gluten-free food that has the same taste and consistency as a mainstream equivalent.

In order to claim, your client must also have spent money on their R&D.

What are they worth?
How much R&D tax credits are worth depends on how much money your client has spent on qualifying R&D activity. They can include the following costs in their claim: staff, subcontractors, materials, and consumables (such as heat, light and power).

SMEs are able to recover up to 33p for every pound spent on qualifying expenditure using the SME R&D tax credit scheme. This means if a client has qualifying costs of £500,000, they could receive a benefit worth £166,750.

Large companies can recoup 10p for every pound spent using RDEC (research and development expenditure credit). This means with qualifying costs of £1,000,000, they could receive a benefit worth £97,200.

Don’t let grant funding stop your client claiming
There is a misconception that the receipt of a government grant prevents a company from claiming R&D tax credits. This is not true.

Instead, if you have an innovative client that is grant-funded, you should, without exception, explore R&D tax credits. How much the R&D tax credit is worth will depend on the nature of their grant, and whether they are able to make an SME, RDEC or hybrid claim.

How to claim and beat the 31 March deadline
PfP can help you. We have an experienced team of chartered tax advisers, chartered accountants and technical specialists who specialise solely in R&D tax credits.

By using our R&D service you can free-up your time to concentrate on what you do best. At the same time your clients will get the benefit of PfP’s deep expertise in this niche area. This means a robust claim that will withstand HMRC’s scrutiny, but which includes all qualifying R&D.

Better still, you will be paid a referral fee for every successful claim. 

To get a claim started, contact us today on 0330 010 4010.