R&D Tax Credits are a scam and 9 other misconceptions!

At Research and Development Tax Ltd we see cases every single day where business owners have been incorrectly advised by other professionals or they have some misconceptions about how the scheme works

Here are our top 10

10) Fiction- You have to have completed a project 

Fact – Your project can be at any stage and you can even apply to HMRC for advanced assurance before you start spending any money at all.

9) Fiction- You must have paid Corporation Tax/made a profit

Fact- your company must submit Corporation Tax Returns but if you have a made a loss and not paid tax you can still make a claim through the R&D scheme

8) Fiction- Your project must have been successful

Fact- The spirit of R&D is to encourage companies to try new things and by nature some of these will fail, these projects can still be included in an R&D claim.

7) Fiction- It is only for chemical and pharmaceutical companies

Fact- R&D can apply to many companies and industries, we have submitted claims for nurseries, training companies, software developers and many more.

6) Fiction- You need be James Dyson to make a claim

Fact – you do not need to be an inventor to make a claim, you just need to be doing something different where an advance can be seen.

5) Fiction -Directors should pay themselves more so they can get more on their R&D claim

Fact- The full picture of the company’s tax position should be reviewed to ensure that the overall tax paid is reduced.

4) Fiction- You must have been trading for more than 2 years

Fact- To claim you must have completed your accounts for the year of the claim, many companies make a claim in their 1st year.

3) Fiction – It is too late to make a claim for last year

Fact- a claim can be made for 2 prior years

2) Fiction – Only material costs can be included in the claim

Fact- There are many costs which can be included, such as salaries, freelance costs, and administration costs.

Finally and vey much our favourite ……….

1)Fiction- R&D is a scam!

Fact – It is an official scheme run by HMRC and all our cases are written and sent to the R&D department for review- more can be read on HMRC's website https://www.gov.uk/government/collections/research-and-development-rd-tax-relief

If you think you may have a claim or would like a claim reviewing please email [email protected]