How Far Back Can You Claim R&D Tax Credits?

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How Far Back Can You Claim R&D Tax Credits?

One question we get asked every day is how far back can a business claim for government-backed R&D credits. Having worked with a number of different organisations in a whole range of sectors, we can answer this question competently.

Innovation adds value to your brand, improves the products and services you offer and helps you to move your industry forward as you lead my example. 

The trouble is that innovation comes at a cost. Businesses shouldn’t have to choose between being innovative and being profitable. While innovative strides can make you profitable in the future, the process of research & development can really eat into your cashflow. Applying for R&D Tax Credits can help you to recoup the costs of research and development and keep your business where it belongs… on the cutting edge of innovation. 

What are R&D Tax Credits?

R&D Tax Credits were implemented by the government in 2000 to help Small to Medium-sized Enterprises (SMEs) like yours to drive innovation without building up a bottom line which strangles profitability. There are separate schemes for SMEs and large companies. Yet, because SMEs have fewer resources available they tend to be subject to more relief than their larger counterparts. 

However, the tragedy is that many SMEs are unaware of how much they are entitled to claim for (up to 230% of qualifying R&D expenditure). Moreover, they are often also unaware that they can claim beyond the current tax year. 

How far back can you claim?

According to HMRC guidelines, applicants can make a claim for relief up to 2 years after the end of the accounting period to which it relates. So, at the time of writing, applicants are now unable to submit their claim for the 2019-2020 tax year which would allow them to make a claim for the accounting period which ended on March 31st 2018. They can, however, claim for any expenses incurred between April 1st 2018 and March 31st 2019.  

First-year startups

For startups in their first year, the waters are muddied, slightly. When you register your business at Companies House, your incorporation date is set at that nominated registration date. However, the first accounting period is set as twelve months from the end of that month, which isn’t usually workable for new businesses. As such, their first year in financial terms may be between 6 and 18 months long. Meaning that their first accounting period may not necessarily be their first year.

Do I have to wait for my business to become profitable to claim?

Because R&D Tax Credits offer Corporation Tax relief, many businesses believe that they need to become profitable (and therefore taxable) if they are to make a claim. This is not the case, however. You can still claim for R & D Tax Credits even if you have not yet paid Corporations Tax. Instead of relief from your tax liability you will be able to claim a cash payment.

How we can help

R&D Tax Credits make it easier to invest in innovation without endangering your profit margin. However, making the application on your own can be a daunting and complex affair. We’re here to assist you in making a claim and maximising your chances of success. 

Industry knowledge

We specialise in the materials handling, recycling, testing and instrumentation arenas. Nobody knows this industry better than us. We understand the projects and expenses against which businesses can claim, as well as being able to pre-empt the stumbling blocks which can lead to a claim being rejected or delayed. Many of the sectors with work with are more traditional businesses such as companies in the construction industry, civil engineering, electrical contracting and waste management. Our value is in understanding the R&D work which has taken place in each financial year.

Claims procedure knowledge

As well as helping you to make a successful claim, we also help you to get your claim processed faster. We know that there are often delays in the processing of R&D Tax Credit claims. These are often caused by applicants failing to provide sufficient information or documentation. Fortunately, nobody knows the claims procedure better than we do. We can help you prepare your claim in a way which minimises the risk of delay.

No win-no fee

An SME like yours needs to be able to avoid risks and unnecessary expenditure. That’s why we remove risk from the equation for you. We operate on a no win- no fee basis. Meaning that if your claim is not successful, you won’t have to pay us a penny. 

 Want to know more about our services? Need to talk about your entitlement over the past 2 years? Please don’t hesitate to get in touch with us today. Let us guide you on the path to innovation.

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