Claiming R&D tax credits or relief is a great way to maximise the amount of money you have available to invest in future growth. But there are many UK businesses that still haven’t unlocked its full potential yet.
With such generous incentives available to businesses that are investing in research and development, it begs the question: why is R&D still being underclaimed?
Here, we explore the challenges and beliefs that hold businesses back, and how you can combat them to reap the rewards of innovation.
“I don’t understand R&D”
Many people simply don’t understand R&D. Whilst there is information available on the HMRC website, it’s complex and offers little guidance around exclusions. There are different types of claims as well as restrictions on the expenses that qualify, making the whole process less than straightforward.
This leads many to dismiss R&D tax credits and relief altogether. Even those who are familiar with it may falsely believe they’re unable to claim for unsuccessful projects or R&D completed using subcontractors. Even those who do submit claims may not be getting relief for all their allowable expenses.
“It’s too good to be true”
Some schemes seem too good to be true, such as splitting supplies of goods or services to pay lower rates of VAT. In this situation, it was – HMRC is now investigating these schemes as they avoid paying tax.
The amount that can be gained from R&D claims is often substantial. SMEs receive. Such high returns has led many to be concerned that this could be a tax avoidance scheme too. But claiming R&D tax credits and relief will result in rewards for your business. You just need to ensure that you go through the correct channels, and question anything you believe to be suspicious.
“It’s not worth my time”
It’s easy to underestimate the amount of compensation that can be claimed; as a result, many businesses feel the effort to claim will outweigh any relief gained. This is often because they haven’t worked out the calculations correctly.
RDvault’s software ensures there’s no error in the sums. It integrates with Xero in real time, so you’ll be able to accurately track the amount of relief you would be entitled to, as well as the value and progress of your claims if you do submit, at any stage of the year.
“It might leave my business vulnerable”
You might believe that making a claim will open up a can of worms to other areas of your business. Whilst HMRC may investigate you and take a closer look at your accounts and finances, this isn’t something to be concerned about.
Due to new regulations, the auditing process is much clearer than in previous years, and businesses have additional protection. If all your project documentation is accurate, you have nothing to worry about.
“I don’t want to ask for help”
The ins and outs of R&D tax relief and credits are complex, and some businesses don’t think to ask for professional guidance on this. Experts can help you make sense of the claims process and explain in simple terms anything that may seem confusing.
They can also give assurance on whether your claims are accurate, which includes ensuring you’re claiming all the relief you’re entitled to. So while asking for help might sound like an expensive option, you’ll benefit from more money in the long run.
With RDvault, the process is made simple from the get-go. We demystify how you make claims. You’ll be able to simulate how a claim would work, and access our partner network for advice and support. With our help, you’ll achieve growth you can bank on.