Keep calm and carry on claiming

Since 2009, R&D Tax Claims limited, a Wolverhampton based tax advisory firm targeting SMEs, has helped its clients reclaim over £12 million in corporation tax via HMRC’s R&D tax credit scheme.

Many of those that R&D Tax Claims has helped were unaware of the R&D tax credit scheme, or of its relevance to their businesses, prior to working with the firm but Mark Evans, managing director of R&D tax claims, says that its applicability is surprisingly broad.

“Most of the companies we help are in the engineering and manufacturing sector, but the scheme is not just for manufacturers. It covers SMEs that are developing their products and processes or introducing new ones – even the ones that fail can qualify.

“A good R&D claims specialist will help a company identify quickly if they qualify, and we operate a no win, no fee policy with a 100% success rate.

Mr Evans is happy to have lent a helping hand in raising SME awareness of their legitimate right to reclaim money spent on R&D. But a first time claim should not be viewed as a lucky one-off he emphasizes.

“Once a successful claim has been made, it’s good sense for the process to be embedded in the company accounting practices, as it’s possible to make subsequent claims.

“Our client precision engineers A&M EDM of Smethwick have received their second refund, bringing their total over two years to £147,269.”

Another R& Tax Claims client, Mini Gears of Stockport also recently received its second refund, totalling £181,281 over two years.

“Both of these companies are leaders in their fields,” says Evans. “They are working with some of the world’s great names on ground breaking technology, and have grown throughout this long recession through trial, error and determination. It’s a huge incentive for them to get some of their tax back.”

Other tax breaks

And its not only via the R&D tax credit scheme that companies can access this recognition for investments made in continuous improvement an innovation says Evans.

“Another Government incentive is the Patent Box scheme, introduced in April.

“Patent Box will ultimately provide a reduced corporation tax rate on a business’s qualifying profits of 10 per cent instead of the current 23 per cent.”

Patent Box is a cross sector regime designed to highlight the innovative and creative work carried out in R&D, manufacture and exploitation of a company’s patents and to encourage the colocation of R&D and production in the UK, strengthening the national industrial base for the long term.

“To qualify for the Patent Box tax reduction scheme, a company must be based in the UK and has to hold a qualifying patent or patent right,” explains Evans. These patents must be granted by the UK Intellectual Property office (UKIPO) or the European Patent Office (EPO). Qualifying IP includes UK patents (ie those granted under the UK Patents Act 1977) and patents granted under the European Patent Convention.

“A company’s profits which benefit from the Patent Box scheme are a proportion of the corporation tax profit of the company’s trade, and are called its ‘relevant IP profits’,” Evans continues.

“It is the calculation of these relevant IP profits which is complicated and most SMEs will need a specialised professional advisor to carry this out effectively.”

Evans urges company leaders not to be put off by the apparent complexity of the scheme. “Investigating these benefits is certainly worth it, as our client figures show. Both the R&D tax credit and the Patent Box scheme have been introduced to assist the growth of UK businesses, and we’re here to do the hard work for them,” he sums up.