R&D Tax Credits Explained
R&D Tax Credits are an HMRC UK tax incentive designed to encourage companies to invest in innovation. They can offer your business an opportunity to claim back a proportion of your R&D expenditure as tax credits.
With 11 years’ experience of R&D Tax Relief, MPA has developed a 4-step process that makes things simple.
Our expert knowledge of tax rules, business and industry allows us to interpret the language and as a result maximise your entitlement.
£0 millionsecured for MPA's clients
- Your business
- Industry sector
Do the following apply to your business?
- Are you spending money on developing new processes, products or services?
- Were those projects started in the last 2 or 3 years?
- Do you employ staff across a variety of roles who work on projects that advance knowledge, and clarify uncertainty?
Select your industry sector
- IT & Software
- Automotive & Motorsport
- Life Sciences
- Manufacturing & Material Sciences
Are you spending on any of the following?
- Staff salaries
- Raw materials
You should be eligible!
You should be eligible for R&D Tax Credits. At MPA, we have extensive experience in ensuring your claim is accurate and that your value is maximised. Did you know, the average R&D tax claim submitted to HMRC was £109,500.
Get in touch with us today for an initial valuation.GET IN TOUCH
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£0Your claim value estimate
The SME scheme
The SME R&D Tax Relief scheme is for companies with fewer than 500 employees and whose revenue is less than 100m euros or whose balance sheet is less than 86m euros. Up to 33% of your R&D costs can be offset against your Corporation Tax and, in some cases, you can receive this as a cash credit from HMRC.
The Large Company scheme
The Large Company scheme (known as RDEC) is for companies with 500 or more employees with revenues over 100m euros and a balance sheet of more than 86m euros. The level of tax relief can be worth around 8% of money spent on R&D.
HMRC's Research & Development Tax Credit Criteria
“MPA exceeded our expectations. Their insight and knowledge of both Biotech and the HMRC research and development tax credit scheme produced a significant uplift in value to us. Their technical competence and in-depth knowledge also meant we didn’t commit a lot of our own time to the work. Our message is that even if you are claiming don’t assume it’s a ‘good claim’ – take the time to review it with The MPA Group.”
Monika Mobley, CEO, Everest Biotech Ltd
“In the journey to finding a technology solution that works at scale, we often find solutions that don’t work before advancing a technology solution that does! MPA have applied their knowledge and insight in our sector to interpret this to produce a robust claim that works for us and HMRC. In my experience an accountant wouldn’t have that level of detailed understanding and expertise in the technical processes we use to deliver results for our customers. This is where they really stand out”
Nick Rodgers, Finance Director, Productiv
“It was very difficult to demystify HMRC’s rules around qualifying activities. MPA’s analyst in this sector, Linda Tomkins, went through our projects and was able to extract the activities that would qualify. Due to the technical nature of our work we needed this expertise and experience to ensure we were claiming in the way required by HMRC.”
Ben Beaumont, Managing Director 48.3 Scaffold Design Ltd
Let our experience and insight allow you to benefit from:
- Reduced complexity
- Minimised time and effort
- Minimised risk of an HMRC enquiry
- Maximised claim accuracy & entitlement
What is the R&D Tax Credit scheme all about?
In 2000 the UK Government launched this EU-supported incentive. It is designed to support SMEs and Large Companies to innovate and increase their spending on R&D activities.
What qualifies as R&D expenditure?
The key element is that the product or service you’re planning to include in your claim is truly innovative and is, at a technological level, an advance on what’s currently available in the market. It’s our job to work with you to gather the evidence that will satisfy HMRC’s criteria, so that you don’t have to worry about interpreting the terminology. One key point is that R&D can still qualify even if the project is not successful.
How far back can I claim R&D Tax Relief?
Claims can go back two full financial years.
Why can’t I just submit a claim by myself?
The detail of how the scheme works, and what is eligible spend is not straightforward. Working with MPA will minimise the time required for your business to submit the claim, and we will ensure that you optimise the value of your claim avoiding a potential HMRC compliance check.
What if I am already using my accountant to submit my claim?
Making a claim is not just a numbers exercise. Our analysts can identify when things like system integration protocols, reducing data search times or building an OLAP database represent an advance or innovation; knowledge that you wouldn’t expect your accountant to have. The accounting treatment of R&D tax credits is not straightforward. Nine out of every ten claims that we review, when taking on a new client, have been calculated incorrectly for one reason or another. This is why working with MPA to support your accountant can make a huge difference to the value of your claim.
What if I am already using a specialist to submit my claim?
Nine out of every ten claims that we review, when taking on a new client, have been calculated incorrectly for one reason or another. Because of our in-depth knowledge of your business sector, we can minimise your involvement and optimise your claim. Why not use MPA as a benchmark against your existing claims, and see if you are optimising your claim, and make sure that you are not in danger of having to undergo a time-consuming HMRC enquiry?
Can I claim if my company is loss-making?
Reporting a loss should NOT prevent a business from making an R&D Tax Credit claim. A loss-making SME can recoup up to 33.35% of its R&D expenditure via the scheme – a significant boost for any company. This is, in fact, a higher proportion of R&D expenditure than a profit-making business could claim for! A successful claim can release a cash injection into your business after your accounting year end, allowing you to continue with the investment that’s vital to facilitate growth.
What if the project we worked on wasn’t successful?
That’s not a problem. Research and development can inevitably result in some project failures. The eligibility for the scheme is not dependent on the outcome of the project, only on whether the spend qualifies.
What happens if HMRC investigates my claim?
The costs in potential fines and time consumed in being the subject of an HMRC enquiry is significant. Worryingly, 90% of the claims we audit – where our clients have made a previous R&D Tax Credit claim – were wrong. They were either overclaiming or underclaiming. We review over 2,500 projects each year and write detailed technical reports on 40% of them to maximise your entitlement. We’ve been doing this for eleven years; that’s a lot of projects. On the rare occasion where there is an enquiry, we will always defend any claim that we’ve produced at no extra cost.
Can I claim for spend incurred overseas?
Potentially yes, but this is an area that requires an expert view, to understand fully how your business and activities are organised and to ensure that all eligible expenditure is recognised. We have a team of tax experts that will do just that and can ensure that your claim is optimised.
Can I claim for sub-contracted work?
The short answer is yes, but it requires an expert view to ensure there is clarity on the contractual relationship. This is the sort of question our MPA experts deal with every day.
Why use MPA?
As R&D tax specialists, we use our experience developed from the submission of over 2000 successful claims, to identify areas of eligible activity and eligible costs. The key to this is the vast experience that our experts have across a host of sectors, so they really understand your business. Our tax experts then ensure that we optimise your claim.