Most businesses when you ask them if they carry out research and development activities they will likely say no. Why? Because they think this is only relevant for sterile laboratories with employees wearing hair nets and having to pass though an air lock before they can enter the building!

However, you may be surprised to learn what activities can actually qualify for Research and Development expenditure. This could include writing new IT software or experimenting with new flavours or recipes. Your need to prove that your activity resolves “scientific or technological uncertainties”.

If a SME company qualifies for the R & D Scheme, then it can claim an additional deduction of 130%. This equates to 230% relief on the total actual expenditure.

There is also the opportunity to get a tax repayment from HMRC for R & D expenditure which creates a loss. The loss could be given to HMRC and they will then repay 14.5% of this loss. So if you surrender £100,000 loss which is attributable to R & D expenditure then HMRC will send you £14,500 – good news!

Qualifying R & D expenditure would include costs associated with the project, such as for example, staffing, software, subcontractors (there is a limit of 65%) and consumables.

There may also be the possibility, if you qualify, to obtain Advance Assurance from HMRC to determine whether your first claim qualifies for R & D relief. On applying for Advance Assurance a HMRC specialist will guide you to understand and comply with the scheme.

If you wish to discuss Research and Development claims with an expert then please do not hesitate to send an email to kevin@kwaccounting.com or call us on 020 7015 2299