r & d tax credits made simple

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Government Grant & Tax Consultants

R&D Tax Relief Overview

10/10/2013

R&D Tax Relief Overview

10/10/2013


Government Grant & Tax Consultants Ltd., 21 Verulam Road, St. Albans, Herts, AL3 4DG Tel. 01727 738600 Fax 01727 738609 www.ggtc.co.uk Registered England 5852134 - This document and it's content is copyright of GGTC © 2011. All rights reserved

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“Money won't buy happiness, but it will pay the salaries of a large research staff to study the problem.”



R&D Tax Credits“The biggest single Government funding scheme for business”

£1.2bn was given back to UK companies during 2012-2013.

Over 12,000 companies benefited in the last financial year.

An est.90% of eligible SME’s have not claimed

The avg. annual SME claim is £43,000 p.a.

Straight to the bottom line of your business



R&D Tax Credits“Research is creating new knowledge.”

The scope of qualifying R&D activity is broader than most think From projects seeking to achieve an advance in science and technology, to activities that make an appreciable improvement to an existing process, product, material, device or service through scientific or technological changes.

You can recover cancelled or failed project investment costs.

Loss making companies can claim as a cash credit or offset against future profits.

95% of the companies we talk to didn’t realise they qualified, until we identified claimable activity.



R&D Tax Credits“If we were certain of the outcome, it would not be called R&D

would it?”

For the SME market, the net cash benefit is unprecedented

Avg. annual claim is £43,000.

A potential £129,000 cash injection for your business.

Paid c.42 days from claim filing.

Claim every year with qualifying activity.

If you already claim? are you confident you are receiving your full entitlement?



R&D Tax Credits

You probably qualify if you are:• A UK Ltd Company, trading 12 months or more, with PAYE staff.

• You do not have to be paying corporation tax

AND do ANY of the following • Develop new or regularly change the way you make your

products or employ any staff with a technical or scientific

background.

• Develop software, IT solutions or products in-house.

• Develop and improve manufacturing processes or services.

• Develop or appreciably improve products, materials or

devices.

• Develop samples, prototypes or undertake testing



R&D Tax Credits What is a technological advance?

APPRECIABLE IMPROVEMENT

NEWCAPABILITIES

NEW TECHNICAL

KNOWELEGE

“Not readily available or readily deducible by a competent professional working in the field.”

•Was it hard?

•Tell me Why?

•Could your competitors easily do it?

•Can you find the answer on



R&D Tax Credits

A successful claim is based on its technological or scientific merits & is not something that can easily be performed solely by the

company/ Finance department or by their accountants in isolation, unlike many other aspects of company tax.

The scheme itself is complex and resource intensive When Government introduced the scheme it decided HMRC would not employ scientists or engineers to assess claim validity.

Their idea was that the technical staff performing the R&D or innovation would be the ones best equipped to make the assessment as to what actually qualifies for R&D Tax Credit relief.



R&D Tax Credits

Job Title PAYE staff or Subcontractor

% Time on Qualifying R&D Activity

Qualifying £

2 x Developers or Engineers 2 x £35,000 50% £35,000

IT or R&D Director £50,000 30% £15,000

MD £100,000 5% £5,000

Subcontractor Invoiced Costs £20,000 Invoice 65% of Fee £13,000

Materials/Utilities/Prototypes £12,000

TOTAL £80,000

£80K qualifying R&D activity spend is “enhanced” by 125% = £100K “pre-tax” scheme qualifying expenditure

At 20% small business C.Tax rateR&D Tax Credit £20,000



Government Grant and Tax Consultants Ltd

GGTC Ltd21 Verulam Road

St AlbansAL3 4DG

www.ggtc.co.uk

Call us on: 01727 738602Email: [email protected]

r & d tax credits made simple

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