R&D Tax Credits – a critical cash flow injection

At a time of great concern for all of us, many businesses are still missing a valuable opportunity to increase their cash flow by thinking they cannot claim for R&D tax credits. Here is a quick reminder of the basic eligibility criteria:

1. You must trade as a limited company
2. You must incur qualifying costs, typically salaries, materials and subcontractors
3. You must be seeking to make an advancement in technology (whether successful or otherwise)
4. You must have separately identifiable projects

Each year, we come across more businesses who, whilst eligible, still do not claim, with the famous Scots’ modesty often getting in the way. Right now, it is critical that businesses do all they can to get through the current circumstances and R&D tax credits can provide that much needed cash flow injection.

Ross Oliphant, Partner in our Glenrothes office, discusses, “The Government has provided a package of support to assist businesses during this unprecedented and challenging time. R&D tax relief is not new but is just as valuable to companies and our direct contacts with HMRC have confirmed that they are working at pace to pay out successful claims.

“On 27 March 2020, one of our multi-disciplined engineering clients called to advise that they had received their refund from HMRC of £80k as a result of a R&D claim submitted at the start of March and wanted to thank the EQ R&D team for encouraging the claim to be made. The client received this cash inflow in the same week that Boris Johnson announced greater social distancing measures with more businesses starting to halt operations and the company’s immediate future looked very uncertain”.

Partner and Head of our R&D team, David Morrison, goes on to share one of his clients experiences, “On Thursday 2nd April, I took a call from a food & drink client thanking EQ for all of the support provided in making an R&D claim, with the process only taking two and a half weeks from client query to the claim being lodged with HMRC. Over a 2-year period, the claim amounted to just over £57,000 and the owner wanted to make it clear that this refund was the likely difference between survival and cessation. He is using the money to look after his great team in their hour of need, and to ensure he is ready to go when the current restrictions are lifted.

“For EQ, this is our job but also our responsibility. We love doing this kind of work and over the last few years have generated around £19m in tax repayments for clients, helping to stimulate innovation and employment in Scotland. We’re very proud of that achievement”.

Ross adds, “No one could have forecast the current position that the UK finds itself in. However, while lots are focusing on the Coronavirus Business Interruption Loan Scheme, the Business Support Fund from local councils and various other tax deferrals, they should not forget about the permanent inflow of cash that can be achieved by making an R&D claim”.

Claims may require only 3 to 5 hours of your time and can be done largely over the phone with the likely result of significant tax refunds. We do not tie you into contracts and will do as much or as little as required to help businesses, the important point being to make a claim to generate cash flow.

Do NOT simply assume this does not apply to you. To find out more, and to assess your eligibility, give David or Ross a call on 01382 312100/01592 630055 or email david.morrison@eqaccountants.co.uk or ross.oliphant@eqaccountants.co.uk.

You can also visit our R&D page or take a look at some examples of claims we’ve completed for clients here.