If you address technically challenging problems – whether successful or not – you should be asking “can I claim money back”? If you don’t know, we can answer this question for you with a quick, free call.
The hard, cold facts about people who claim money back
Between 2000-01, when the R&D tax credit schemes were launched. By 2017, over 240,000 claims have been made and £21.4 billion in tax relief claimed.
As of September 2018, there have been 39,960 R&D tax credit claims for the financial year 2016-17. This has resulted in £3.5bn of R&D tax relief support being claimed. This equates to an average claim of £87,587 per applicant through the large company (RDEC) scheme. The figure for the SME scheme is £47,249, with the number of applicants rising by approximately 22% year on year.
R&D claims are concentrated in companies with a registered office in London, the South East or the East of England (45% of all claims and 60% of the total amount claimed for 2016-17). However, the regional split is based on the registered head office location so may not be where all of the R&D activity takes place.
In the North West, there have been 4,330 claims in 2016-17 covering £1.4bn of eligible expenditure, resulting in £235m claimed.
The ‘Manufacturing’, ‘Professional, Scientific and Technical’, and ‘Information and Communication’ sectors continued to have the greatest volume of claims. These make up a total of 71% of claims and 75% of the total amount claimed for 2016-17.
Can I claim money back?
There are pretty much 2 rules to the scheme:
- Are you performing “technically challenging” research to overcome an obstacle or develop something new?
- Would this research be technically challenging to another “competent professional” in your field?
If the answers to both of the above questions are “yes”, then it’s likely that you’ve got a case for a claim.
The way the system works is quite simple. The scheme identifies “eligible expenditure”, adds an additional 130% and deducts the relevant sum from your pre-tax profits, meaning you pay your corporation tax on a much lower figure. It’s a little more complex that this, but simply put, the average company reclaims 26% of their R&D expenditure – which includes salaries.
So, if you’ve spent £100k on eligible R&D, you might be able to claim around £26k of this back in tax credits.
If you’re not profitable, that’s not the end of things – you can exchange your tax credit for a lower cash payment.
How far back can I claim money back?
The beauty of this scheme is that it’s one of the only schemes you can use to fund work you’ve already completed. No risks, no comprehensive and complex applications. If you’re eligible, the money is yours.
You have two years from the end of your accounting period to submit a claim for any qualifying expenditure that you’ve identified during that period. So, if your accounting year is April – March, you can still claim for work as far back as April 2016!
The “1 hour game-changer”
The sands are shifting. At the moment, claims are typically competed by accountancy firms or consultants. There are a few challenges with this:
- The HMRC definition of R&D differs quite a lot from that typically used by accountants. As such it’s easy for them to miss items that are eligible – and even include items which are not eligible.
- Consultants tend to charge around 20-25% of your claim value. In doing so, they spend substantial time with you developing the claim. This requires disruptive time away from your everyday business operations.
We use a dedicated software application, developed by a senior executing formerly with a national R&D credit company. This helps us complete a full claim in a single hour. Yes, 1 hour. You can earn on average, £47k in a single lunch break.
Q. How do we do this?
A. Simply by asking the right questions.
We’re innovation experts who understand the R&D Credit system. The software has been developed by subject matter experts who know how to crunch the numbers. We’ve pulled this together to develop a 5-step process which combines the excellence of the software package with the knowledge of experienced advisors. This helps you maximise a comprehensive claim in the shortest time possible.
But I claim money back, thanks…
Yesterday, I was getting my hair cut, and my hairdresser asked me “so what’s so good about this service. He asked “why would I move from my existing supplier to you?”.
I replied “Jack, the thing I love about you is that I come in here, you cut my hair neatly and efficiently. I enjoy the experience, I walk out feeling like a million dollars, and it’s not taken a whole afternoon.”
“Now, I could walk into one of the top hairdressers in the city, and ask for the same cut. It would take four times as long, cost four times as much, the experience may not be as good and the output will be the same.”
“Most companies claiming are going through an experience which costs them far too much, and takes too long. We’re the Jack of R&D tax credits. We’re smart, quick, effective and put the client first – not our financial gain. When people find you, Jack, the big suppliers lose business.”
Jack got it straight away. However, explaining this in simple terms to some businesses is tough. Despite the simplicity of the facts, they want to believe that a more time consuming, expensive service is bound to be better.
Newsflash – it’s not. If you want to pay over the odds and take longer than you need (with no additional benefit), then that’s you call.
Get ready for the haters…
So what’s the first thing you’re going to do? Most likely, ask your existing provider about this system. And what will happen? They’ll slate it, and explain how it’s nowhere near as good as their service. They’ll tell you that we won’t find as much eligible spend as them, etc. This is a natural response when a better, game changing solution arrives.
Remember why HMV went down the pan? That famous comment from their MD, Steve Knott that “Downloadable music is just a fad and people will always want the atmosphere and experience of a music store”. OK, see ya.
So, we put the proof in the pudding. We’d say, take our free consultancy and develop a case for your business. Compare the estimated figures to those provided by your account or consultant, and let’s see how it matches up. Compare your eligible spend, the time it takes to involve you in preparing the report, the cost and the overall experience – and make your own decision.
If you choose to then go with us, it’s as simple as saying “yes please”. We can prepare your final report as a PDF file for your accountant and HMRC with a single click, based on the information you’ve already given us.
Dispelling the myths about whether you can claim money back
A number of people don’t apply because of the myths associated with the system. So, if you’re not applying for one of the following reasons, you might want to think again…
– We can’t apply as we’ve received grant funding.
Wrong. Receiving grant funding certainly has an impact what you can claim, but it only affects activities within that specific funded project. Our software takes account for this quickly and easily.
– We don’t do enough work to claim R&D credits.
Probably wrong. As long as you do eligible work, you can claim. This comment usually refers to the cost of using a consultant, as it’s got to be worth their time. Our studies found that the average consultant won’t touch companies with eligible spend under £40k – we’re able to support companies with eligible spend as low as £10k.
– The work we do isn’t eligible.
Depends – who’s made that decision? Too often, this decision is made by people without the sufficient knowledge to make that call. You don’t have to be an R&D company. You don’t have to be creating particle accelerators. As long as you solve technical problems which would be challenging to another professional in your field, there’s a chance you can claim. We’ll more than happily answer that question for you.
– You can’t claim for software
Again, it depends. There’s a lot of software work which is eligible – remember ICT is one to the top 3 sectors making claims. The key is in identifying which activities are eligible. With software it’s really about stripping away the application and looking at the challenges in the development of the technical solution.
– Making a claim takes too long
Totally wrong. If it does, you’re using the wrong people. Many consultants and companies take time investigating every nook and cranny to maximise your claim. However, we can now do this in an hour, saving you days or even weeks.
– It’s expensive
Again, wrong. Most consultants claim around 20% of your claim. We charge a simple, flat fee meaning you get more back from the work you’ve done.
– We’re not a profitable business
That’s OK, your accountant will help you identify whether it’s best to carry this forward to next year, or surrender your tax credit for a lower cash payment. Either way, you win.
Our 5-step process to claim money back
We’ve got a simple process which gets you from interested to claiming in 5 steps:
- Let’s start with a free 15 min call. We discuss R&D Credits, how our system works, what work you might have which is eligible, and the next steps
- We send you our free R&D Credit Guide. This helps you identify eligible projects and activities you have, and prepare your data for our claim call
- During the preparation of your data, our experts provide free email and phone support with any queries you may have
- We provide a free 1 hour meeting (in-person, Skype or phone). In this, we complete your claim and provide a basic estimation of your eligible R&D spend and claim
- If you want your report with final figures for HMRC and your accountant, we provide a full PDF copy at the click of a button. This is the ONLY part which costs you.
Once you have your report, your accountant can file your claim with HMRC, with most claims being paid within 4 weeks.
Who can we help claim money back?
We’re looking to talk to:
- Companies who want to know if they’re eligible for a first claim
- Companies who are already claiming but want to save even more money and time
- Accountants who would like to use our service for their clients
- Coaches, consultants and trainers who want to earn referral fees by offering this service to their clients
What do we do next?
Simple. Call us for a chat. We’ll work out how we can help, and before you know it, your claim will be complete.
Geminüs provide a range of services to help you get more from your people. if you want to know more about our R&D Tax Credit service or our other programmes, please contact richard@geminustraining.com.
For more information on our R&D Credits services, click here: RandD Tax Claims – Fast fixed fee R&D claims
For more information on the activities of Geminus, click here: http://www.geminustraining.com
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