Why is year-end so important for R&D Tax Credit claims?

You’re allowed to claim for your past two full years, however, as soon as you slip over your current year-end, then you forfeit one of these years.

Very typically, an R&D Tax credit could be worth ￡50k to an SME (This is the average claim size according to HMRC). By not claiming in time, you could easily lose half of this - just because you left it too late.

What a waste!

How does it work?

Let’s say your business year-end is 31/12/2020.

By the rules, you can claim retrospectively for the year ending 31/12/2018 and for the year ending 31/12/2019, as well as for this current year. If you delay until January, well you lose all of the year ending 31/12/2018.

Gone for ever, money left on the table, cash burned!

How do you make sure that you claim the full amount, on time?

The best way to maximise your claim is to instruct your R&D Tax specialist to prepare a three-year R&D Report for the past two years and for your current year. This can be submitted by your accountant before the 31st December together with your financial claim for the past two years. (The claim for this year can be submitted later with your annual accounts).

The good news is that you’ll receive a cheque for your past two year’s claims, often within six weeks, and you can look forward to a reduced corporation tax bill for this current year.

However, despite a staggering 23% growth in the amount of tax credit claims, there are still many companies leaving readily available cash on the table: cash they could reinvest back into the business. While some companies aren’t claiming the full amount, others still aren’t claiming at all.

Don’t miss out on your claim!

What does it cost to check whether I can claim?

It shouldn’t cost you a penny. A reputable R&D tax specialist will provide you with free advice on whether you can claim or undertake a free audit of any of your prior claims to identify if you were under-claiming or over-claiming for your previous R&D activities. It just takes a phone call.

What do I do if my year-end is approaching?

Applying for R&D tax credits can be confusing and overwhelming. From our experience it seems that a guidance telephone call can overcome some of the worry of supplying the information we require and relieve the concern of what format and which facts need to be included – as our service includes report writing based on your information.

What to do if my year-end seems a long way off?

With a lot going on in the business every day, other matters can get pushed until the last minute, which typically results in haste when approaching the deadline. Real time collection of data is an easy way to capture facts, figures and man hours, which all leads to making your claim comprehensive and robust, which ensures compliance with HMRC. The sooner you start, the easier the process will seem. 

A specialist can identify the areas to include in the report to ensure it is in-line with HMRC’s expectations, and make suggestions of improvements to your record keeping, which will both facilitate and maximise future claims.

All you need to do is to get in touch with one of our specialists. 

Win, win, win all the way.