A brief run through 5 common misconceptions regarding the UK R&D tax relief applicable to UK companies. The enhanced R&D tax relief regime allows loss-making companies to claim tax payments from HMRC and reduces corporation tax payable by profitable companies. It can apply across all company industry sectors. http://www.businessn2k.com http://www.iptaxsolutiions.co.uk

1. R&D Tax Relief
5 common misconceptions
July 2013
Tuesday, 23 July 13

2. My name is Steve Livingston
I am a chartered accountant and founder
of a niche tax & accountancy practice,
ip tax solutions
I also write and share ideas and tips for
ambitious entrepreneurs at
BusinessN2K.com
Tuesday, 23 July 13

3. I could probably give you 25 misconceptions
that I hear regarding the UK’s enhanced
R&D tax relief but here are just 5...
Tuesday, 23 July 13

4. 1.“I can only claim R&D tax credits (cash back)
if I’ve paid tax in my company”
Tuesday, 23 July 13

5. Wrong
Tuesday, 23 July 13

6. HMRC will help you supplement your
development costs by paying you a
tax credit equivalent to roughly 25%
of your qualifying R&D spend
(if loss making)
Tuesday, 23 July 13

7. 2.“I need to have paid PAYE / NIC to be able
to claim an R&D tax credit payment”
Tuesday, 23 July 13

8. Wrong
Tuesday, 23 July 13

9. You used to be restricted in the amount of R&D
tax credit you received if you had not paid
an amount equivalent (or more) in PAYE / NIC
But this req was dropped for accounting periods
ending on or after 1 April 2012
This means that companies that subcontract much
of their development work and were therefore
penalised under the old rules should now take
a second look...
Tuesday, 23 July 13

10. 3.“I had never previously known that R&D tax
relief would apply to a company like mine but
we’ve completed our development work last
year so we must have missed the boat!”
Tuesday, 23 July 13

11. Wrong
Tuesday, 23 July 13

12. You can apply R&D tax relief retrospectively
by amending the tax returns for the previous
two accounting periods
Tuesday, 23 July 13

13. 4.“My company is too large to be eligible to
make a claim under the preferable SME
R&D tax relief regime
Tuesday, 23 July 13

14. Wrong (probably)
Tuesday, 23 July 13

15. The SME definition for UK R&D tax purposes is
HUGE
Less than 500 employees plus either
turnover less than €100m or
balance sheet total less than €86m
This probably covers 90%+ of UK companies
Tuesday, 23 July 13

16. 5.“We don’t have an R&D Unit with
specialists in white coats so it is
unlikely to be relevant to us”
Tuesday, 23 July 13

17. Wrong
Tuesday, 23 July 13

18. R&D tax relief requires an advancement in
science or technology
The ‘technology’ test can cover pretty much
all industry sectors from Architects to Zoos *
(* assuming the latter paid tax and were particularly innovative in the way in which
say they fed the resident lions without being eaten themselves!)
Tuesday, 23 July 13

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Tuesday, 23 July 13