mca group

10 things you may not know about R&D tax credits

The talk about R&D Tax Credits has slowed down in recent years, and the number of misconceptions touted as fact regarding the claim process is on the rise. Dr Andrew Jupp, head of the specialist R&D Tax Credits team at mca takes the top 10 and sets the record straight.

  1. Claims take a lot of time to prepare

    This is simply not true. At mca we have a tried and tested formula whereby it takes approximately an hour of your time to talk to us, answer the probing questions we pose, then agree the report that will be produced.

  2. Claims cost a lot in professional fees

    You’re right, R&D Tax Claims are not cheap to get right. At mca we guarantee that you will always get back a lot more than it costs.

  3. Only technology companies can claim

    This is simply not true! Many different types of companies within various industries qualify – take a look recent some recent updates regarding software and engineering companies and stories of many other companies.

  4. R&D Tax Credit strategising constitutes aggressive tax planning

    The Government doesn’t think so as it is encouraging companies to take up this statutory relief.

  5. We’ve missed the boat – all our R&D expenditure was last year

    Wrong – you can go back two years from the current accounting year to make claims.

  6. We hope to sell the company in the next few years and believe applying for R&D tax credits will cause a problem for due diligence

    You are far more likely to have a problem if a purchaser asks you why you didn’t make a claim.

  7. My accountant says that all I need is a one-line claim in the tax return

    A one-line claim in the tax return used to be sufficient, but best practice has always been to submit a detailed report. HMRC have now given guidance on what this should look like and keep us constantly updated, the beauty of working with a professional.

  8. If I get HMRC advance assurance then I don’t have anything else to do for the next three years

    This is true only if there is absolutely no change in your business; our experience shows most companies change considerably over a period of three years. You still have to demonstrate that the activities are qualifying and what the associated costs are.

  9. My accountant tells me that because I take my income as dividends, this doesn’t qualify for R&D tax credits

    This is correct. However, you should double-check the arithmetic and see whether you might be better off drawing a salary and claiming tax credits. We have a spreadsheet that helps with this. Another idea is to use split contracts to separate R&D qualifying activities from other functions within the company.

  10. Why haven’t I claimed tax credits before?

    That’s a great question – better late than never. Click here for our Quick Check to see if you’re eligible.