In this blog, Eilidh Hobbs in our Research & Development Tax Relief team highlights how the relief can provide a lifeline for qualifying businesses during the current recession.
Most, if not all, businesses have been affected in some way by Covid-19. Some have been lucky enough to see a surge in demand due to the nature of their business, but unfortunately many have been negatively impacted. This meant that management have had to move their focus away from long-term strategy, to managing day-to-day cashflow.
HMRC have introduced a number of temporary schemes and incentives specifically to support companies through the unprecedented pandemic. However, there are other permanent schemes that can also help businesses through these trying times, such as R&D tax relief.
Many companies are carrying out qualifying R&D activities but have not considered claiming tax relief in the mistaken belief that they don’t fit the conventional image portrayed of a pure R&D company.
HMRC’s definition of R&D applies to all industries and as long as your business seeks to achieve an advance in a field or science or technology, and in doing so is required to overcome scientific or technological uncertainties, you will qualify for the relief. The definition is wider than you would think. Chiene + Tait’s dedicated R&D specialists are happy to discuss any projects your business has undertaken to assess whether you may be eligible to claim the relief.
A claim can result in a generous cash tax credit, or a reduction to tax liabilities and you have two years from the company’s financial year end to make a claim – so you can benefit from activities and R&D investment in prior periods; up to three years prior. The benefit may also be with you quicker than you would expect as HMRC are currently aiming to process SME claims within 28 working days.