The eventual impact of the ongoing Covid-19 crisis on SMEs is naturally hard to pre-judge, but one thing we can say with absolute confidence is that it will not be good. At this moment, with a lack of clarity on exactly when the crisis will end and even some debate over when the peak will be reached, the one thing we can say with certainty is that the pandemic will be the final straw for some small businesses. Relief, in the form of grants from the Coronavirus Job Retention scheme among other incentives, will certainly save some – but it has already come too late for others.
If, on the other hand, your business is a self-employment affair, the opening up of Universal Credit to make up some of the shortfall in this era may be enough to keep you going until late June, when cheques are expected to fall through letterboxes under the Chancellor’s subsidy scheme. Add to this the fact that tax payments for July can now be deferred until January 2021, and it becomes clear where businesses can start to claw back some of the money that has been lost to this pandemic.
What may well be lost on business owners, however, is a little-known incentive that could allow them to access funding they didn’t know was there. Since 2000, the Exchequer has made credits available for businesses that invest in Research and Development (R&D), which could allow them to claim back a “superdeduction” on their taxable income. This credit on their tax bill can come to 230% of any R&D spending.
What’s more, multiple businesses may not realise precisely what counts as eligible R&D spending under the scheme, but it is certainly worth any business exploring in detail particularly during a time when every penny is likely to count.
Although associated by many with the sciences, research and development are an essential part of just about any business sector you might care to name. If any part of what your business spends contributes to a greater understanding of your field, then your company is potentially eligible for R&D tax credits under the scheme which, although it celebrates its 20th birthday this year, has flown under the radar for many business owners.
If you suspect that you might be entitled to tax credits under this scheme, then it is important to do the following things:
- Assess any activity that may qualify as Research and Development under the scheme
- Calculate the amount of spending on that activity; this will be the amount on which your relief is calculated
- Submit a CT600 tax return reflecting your spending.
This is well worth doing as soon as possible, as HMRC are likely to be busy for some time going forward. The sooner you get the claim in, the better for any timeframe on a payout at a later stage. It is also advised that you look at any spending you can prove within a 24-month period working backwards, as claims can be backdated up to two years.
Naturally, making claims for a form of business funding you didn’t know existed can be difficult, as you will need to look for supporting evidence you didn’t realise you would need to access. It is advisable, in this case, that you enlist the support of consultants such as Veritas Noble to manage your claim – their expertise in the area will allow the claim to progress in a more timely fashion, and ensure that you are paid every penny to which you are entitled. Amid a likely economic downturn in the very near future, having access to additional funds is an outcome not to be dismissed.
Remember, if your business has been undertaking work that counts as R&D, this is tax relief to which you have always been entitled, so you are well advised to claim it, particularly in the event of an outbreak as serious as the one we are presently experiencing. We are living in extreme times, and surviving them to hopefully thrive in the future is going to require every effort on your part.
If you are presently in any doubt as to whether you qualify for R&D Tax Credits, then be sure to contact a Veritas Noble expert to discuss the details of any potential claim. You will be asked some questions about what your business does, the work it undertakes, and how you can go about claiming this funding at a crucial time for your business.