As you probably already know, research and development (R&D) tax credits are designed as a government’s incentive to companies to invest in innovations. This is a win-win situation for everyone, since the companies get money to invest in their research and development, leading to the emergence of a lot of great innovations. To put thins simply, it’s what the whole world needs right now. Get more info about the whole concept, so that you can understand it better.
Once you find out that your particular business might qualify for the R&D tax credit, you should proceed to claiming it. Now, many companies dread this procedure, mostly because they believe it to be a complicated procedure and also because they are never sure if they can actually get what they are asking for. This confusion is completely understandable.
Still, it’s not like you have to be an expert on the topic in order to get things done the right way. Sure, you will have to be very careful and attentive, but with a few simple tips, you can be sure that you will go through this process without any issues whatsoever. You will find some of those tips below and, hopefully, you will use them to claim your R&D tax credit.
Get The Perfect Consultant
Whatever you are planning on doing, one thing is for sure. You won’t be able to do it alone. And, no, I’m not saying that you should get your brother in law, or a person claiming to know a few things about this, to help you. I’m saying that you need to have the perfect consultant on your side so that you know where your company stands regarding these claims and if you are even eligible for them.
Here’s a bit more about eligibility: https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief
So, your very first step should be to do your duly research and find the perfect consultant that will be able to guide you through the whole process. If nothing else, these experts will save you the trouble of going through the procedure in vain, if they find that you are not eligible. In any case, you will need their help to both check eligibility and maximize your R&D tax credit claim if possible.
Make Sure To Choose The Right Project
The biggest mistake that people make stems from thinking that they can put together just any project and it will immediately qualify for these claims. That, unfortunately, isn’t how things work in the real world. There are criteria to go by and, once again, your consultant might be able to give you some advice on whether you are choosing the right project.
Of course, the first thing to keep in mind is that the project needs to be aimed at searching for a type of advancement in science and technology. Make sure to remember one important thing in this case. If the problem and the solution you were working on could easily be worked out and solved by a professional in a particular field, then you will most likely not qualify.
Another thing that leads to people’s r&d tax credit claims being rejected is the fact that their appetites grow and they get way in over their head. In other words, in their effort to maximize their windfall, people tend to claim for as much as possible. That, however, can easily raise some red flags with the HMRC, especially if things are incorrectly claimed.
Make sure not to go overboard and make mistakes such as naming your directors your subcontractors. Everybody will see through this. In addition to that, work with your consultant to figure out all the expenses that are eligible for claiming in that financial year. Don’t forget that you should be dealing within your financial year, and not the HMRC’s tax year.
Work On The Narrative
Your technical narrative is what really gives you a chance to prove that you have contributed to research and development by solving certain technical problems or doing something similar. Don’t make the mistake of thinking that the narrative is an unimportant formality. It’s much, much more than that, meaning that you need to really commit to making it perfect.
You may also like: How COVID-19 Will Affect Your Tax Return In The UK and US?