While claims can be disarmingly simple to submit, they can be bafflingly complex to submit successfully if you fall into the trap of making one or more of the mistakes mentioned below.
Here are five facts about R&D tax relief that will make your blood curdle….
- UNDERCLAIMING - Noooooo!
It's easy to under claim by missing out important costs you might not know were eligible. Whilst erring on the side of caution can go a long way to avoiding the terrifying pitfalls of putting together an R&D tax relief claim, being too cautious can mean losing out on substantial sums of money.
2. UNCLEAR ELIGIBILITY - agghhhhhh!
You risk an enquiry if you are not clear about the eligibility of your projects. You know you are doing R&D, however HMRC need it explained in a way that shows the complexity of your project, but in simple terms. If they do not understand your supporting report they will question your eligibility.
3. GRANT IMPLICATIONS - Eeeeeeeek!
That tiny grant you took can have a big impact on your claim. If even a penny of state aid touches the costs of an R&D project, the while project suddenly ends up in the large company scheme. Which means that if you have £100,000 of eligible expenditure, that £1000 you accepted to help out on a project has dropped your potential tax credits from £25,000 to just £10,000.
4. SUBCONTRACTING COSTS - Shrieeeeeeek!
If you don't have clear contracts in place HMRC might not accept your subcontracting costs. Consider that company you subcontracted to help with you R&D - do you have a contract that shows they were employed to carry out your R&D? No? Well you might be in trouble, HMRC currently do no ask specifically for contracts but if an enquiry arises they'll want to see how every penny was spent on R&D.
If you get it wrong and over claim HMRC can open an enquiry and ask for their money back any time (and we mean years) after you've submitted the claim. So to avoid a potential horror story, make sure you get it right first time.
