Making a research and development tax credit calculation is far from straightforward. With complexities around the eligibility of projects, the qualifying costs and the level of detail in supporting documents, there’s little wonder that many businesses make mistakes. Here, we take a look at the most common mistakes businesses make when it to comes to claiming for RD tax credits, so you can avoid them when you come to claiming.
- Don’t avoid claiming!
Many companies fall at the first hurdle by not making a claim at all. It can be easy to assume your innovative activities don’t qualify, or to dismiss the relief on the basis that the claims process is too tricky. The remuneration, however, could mean the difference between continuing your work and not. Eligibility is based on whether your activity seeks to make an advancement in science or technology – regardless of the sector you’re in. Enlist the help of an RD tax specialist to determine whether your project qualifies and to assist with the claims process.
- Don’t fall behind with record keeping
As with anything tax and HMRC related, it pays to maintain comprehensive records that are properly dated. Being meticulous in your record keeping may seem like an effort now, but when it comes to making a claim it will be so much easier to provide evidence of your expenses – and will mean your claim is more likely to be successful.
- Don’t miss any qualifying costs
When making your research and development tax credit calculation, be sure to include all your qualifying costs. It’s easy to overlook some of the less obvious costs that contribute to accurate relief, or indeed to leave them out because the guidance is confusing. Again, an RD specialist can help you identify any expenditure that qualifies, from materials and utilities to staffing costs.
- Don’t only claim if you make a profit
Many companies aren’t aware that they can still make an RD tax credit claim if they have made a loss. Businesses have the opportunity to reclaim associated costs regardless of whether they are profitable or not, and regardless of whether the project had a successful outcome. The scheme has been set up to reward any company seeking to ‘achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty’, so even if you’ve made a loss, eligible investments will be rewarded.
Find out more about tax claims
For detailed advice on your RD tax claims, or to find out if your projects are eligible, contact a specialist in the field. They can ensure you aren’t missing out on valuable tax relief and offer a better chance of success than if you tackle the claims process yourself.
