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24 June 2014: HM Revenue and Customs

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HM Revenue and Customs tax relief presentation from 24 June 2014 Innovation Network event in Cardiff

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24 June 2014: HM Revenue and Customs

  1. 1. An Introduction to Research and Development (R&D) Tax Relief
  2. 2. | | 2 This Presentation Will Cover • Benefits of the Scheme – What’s in it for me? • Do I Qualify? • RDA (for Capital expenditure) • How it works? • Definition of R&D • What is an ‘advance’? • Qualifying Expenditure • Complex Issues • Patent Box • Further Help
  3. 3. | | 3 Benefits – What is in it for me? • Tax Credits – Money Back • 28 day turnaround – helping cash flow • Payments on account • R&D unit – helping you get it right
  4. 4. | | 4 Does my company qualify? • Must be a company for Corporation Tax. http://home.inrev.gov.uk/cirdmanual/CIRD81200.htm • A SME http://www.hmrc.gov.uk/ct/forms-rates/claims/randd.htm#1 • Have an R&D project related to the company’s trade or trade the company intends to carry on.
  5. 5. | | 5 Research & Development Allowance (RDA) • The RDA gives relief for capital expenditure incurred on R&D directly undertaken by a trader • R&D tax credits are not available on capital expenditure. • Allowances are only due if the R&D is related to the trade carried on • The rate of allowance is 100%
  6. 6. | | 6 R&D Tax Credits - how do they work? • Claimed through company tax return • Time Limits – 2 years from end of AP • Additional £1.25 deduction for every £1 spent on R&D • Reduces Corporation Tax for profit making companies • A cash refund now of just under £2,500 for £10k qualifying expenditure
  7. 7. | | 7 The Definition of R&D A project that seeks to achieve an advance in science or technology (not arts or humanities) through the resolution of scientific or technological uncertainties For the definition of R&D see HMRC website http://www.hmrc.gov.uk/manuals/cirdmanual/cird81900.htm
  8. 8. | | 8 What is an advance? • Must represent an advance in the overall knowledge or capability in a field of science or technology • Not a company’s own state of knowledge or capability alone • Must not be readily deducible to a competent professional
  9. 9. | | 9 Qualifying Expenditure • Staffing costs • Consumable items • Subcontract costs • Externally provided workers
  10. 10. | | 10 More Complex Issues For example • Grants or subsidies • Acting as a subcontractor • Subcontracting or Externally Provided Workers Please speak to an R&D Specialist or contact your local office.
  11. 11. | | 11 The Patent Box • Commenced from 1 April 2013 • 10% corporation tax rate on profits attributed to patents • UK, EPO & certain other patents and exclusive licences • Must meet Development and Active Ownership Conditions • Profits from a wide range of worldwide income: licensing; patented products and services • Applies to profits after deducting a routine return on certain costs and a marketing profit if applicable For further details http://www.hmrc.gov.uk/manuals/cirdmanual/CIRD 200000.htm
  12. 12. | | 12 Where to get help GOV.UK Website www.gov.uk (use R&D in the search facility) R&D information http://www.hmrc.gov.uk/ct/forms-rates/claims/randd.htm R&D and Patent Box Webinar https://www3.gotomeeting.com/register/259837982 Contacting your local HMRC R&D unit http://search2.hmrc.gov.uk/kb5/hmrc/contactus/view.page?record=Pvzq8v3IoTM

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