An innovative electronics manufacturer in Dorset, has qualified for £140k as cashback from the government via the research and development (R&D) tax credit scheme. The payout was four times more than the client had originally anticipated.
Rob Sowden, of Bournemouth-based consultancy Business Cash Enabler writes:
“It was a familiar story, a business and their accountant trying to compile a claim, with neither party understanding the technical scope of the scheme, which is much broader than is often realised.
It was a real bonus ball because the company was only set to receive c. £35k by attempting to submit a claim in conjunction with their accountant. The R&D tax credit scheme enables a business to recoup a large proportion of costs incurred for any form of unique innovation that requires overcoming technical or scientific uncertainty. The qualifying expenditure can generate tax rebates, a cash payment (even when the business is loss-making), a deduction to offset tax on account or an enhancement of losses to reduce future tax liability arising. Whichever way the client receives the credit, it is a bottom-line contribution to the business.
“Many businesses have previously claimed under the scheme and received small amounts, maybe £10k, £20k or £30k, which is often much less than they are entitled to. What catches many businesses out is that they believe this is an accountancy work-stream, whereas it is really about technology. Because they have received a payment from HMRC, they assume they ‘have it covered’. In reality, they may never know what they didn’t get! The service I introduced this client to provides a technical analyst to identify all of the qualifying activities permitted within the government’s scheme rules. This service doesn’t replace the function of a company’s accountancy firm, but is a specialist service that compliments the accountant’s work. Many accountancy firms now refer their clients to a specialist provider.”
Business Cash Enabler provides a free service to businesses to check eligibility under the HMRC R&D tax credit scheme.