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5 Ways To Maximise Your R&D Tax Credits Claim

Posted on August 18, 2021

Research & Development Tax Credits are a fantastic incentive from the UK Government. They have helped thousands of businesses all around the UK by giving them an extra cash injection or tax break. If your business is carrying out Research & Development activity such as product innovation or developing a new service to help overcome a scientific difficulty, then this scheme is for you.

The amount that you receive from HMRC will depend on the amount spent. The more R&D activity that you have carried out, the more you will be entitled to, the most common mistake when it comes to submitting an R&D claim is underclaiming. This is due to some R&D activity being missed out, which is why it is always optimal to use an R&D Tax Credits expert.

  • Adopt an Innovative Mindset

Understanding and adopting an innovative mindset will ensure that your claim is maximised because you will be more likely to incorporate innovative practices into more of your projects. You will reap the benefits of innovative thinking long after the R&D Claim, ensuring that it becomes a part of your business model and working behaviours. Your employees will assist you with the ideas process, they are the forefront of your R&D efforts so regularly asking them for feedback will go a long way. Requesting feedback from your suppliers and stakeholders will also open doors with placement in new emerging markets and discover new ways to reach customers.

Educating yourself will assist you with solving problems, this will then allow you to reach a larger customer base which can open up new opportunities and markets for your business. By conducting Research & Development Projects with an innovative mindset, you will be positioning yourself ahead of competition.

With a decent portion of the business team focused on R&D focused on innovative strategies, you will find new ways to develop your products, processes and services but also new possible business models, marketing strategies and supply chains and how to improve existing ones.

  • Keep On Top of Project Tracking

Being methodical in your record keeping will ensure that you get the most out of your claim. You will be required to provide detailed records of your R&D efforts, so ensuring that you have been consistent in your project tracking will lessen your chances of an enquiry. All advances in technology and science should be clearly documented, along with dates, times, costs and all outcomes whether they are good or bad. 

Tip: Remember that is optimal to pay directors involved in the R&D Projects salary rather than dividend as the latter can not be claimed as an R&D credit whereas salary can be, make sure this is clearly documented in your project tracking.

  • Do Not Waste Time on DIY Claims

The DIY approach to R&D Tax Credits often ends in enquiries being requested into a businesses projects which not only adds more time to the entire process, but it can also put you at risk of penalties from HMRC. By using an R&D Tax Credit specialist, not only are they more experienced with submitting the overall claim and finding hidden R&D activity therefore maximising the overall claim, but they are also in frequent contact with HMRC, therefore knowing exactly how to deal with them if they enquire your claim case. An R&D Tax Credit claim can be a lengthy and confusing process, most companies that submit their own claims can find it difficult to meet deadlines while juggling their day-to-day responsibilities.

A common misconception is that a highly specialised team such as a Manufacturing Team that carried out the project know exactly how to prove the R&D activity carried out, but what many businesses do not understand is that R&D Tax Credits are a very specialised area of Tax, a skill that many people do not possess. To Find Out More about R&D Tax Credit Specialists Click Here.

  • Keep Detailed Records of Costs

Keeping a detailed record of expenditure for consumables such as materials will help to assist future claims, this will be especially beneficial for industries that are producing prototypes or running trails. Being able to prove the exact amounts that you have spent will give HMRC all the more reason to maximise the claim you have submitted. Always documenting inside your company’s financial year and NOT HMRC’s Tax Year is optimal, this will ensure that no expenses outside of your eligible timeframe are confused with dates outside of it, which not only would be a waste of time and resources, but also confusing for HMRC.

Tip: Remember that is optimal to pay directors involved in the R&D Projects salary rather than dividend as the latter cannot be claimed as an R&D credit whereas salary can be, make sure this is clearly documented in your project tracking. 

  • Be Aware Of What You Can and Cannot Claim For

One of the biggest mistakes when it comes to R&D Tax Credits Claims is companies claiming for non-eligible activity. As mentioned previously, this can extend the duration of your claim and increase risk of an enquiry. It can be confusing and difficult to work out exactly what HMRC wants to see from your report, but the best thing that you can do is speak to a specialist.

Knowing the exact qualifying activity and expenditure will ensure that your technical report is to the highest grade. The narrative needs to solidify your R&D efforts with detail, you need to prove that you have conducted some R&D by solving uncertainties and coming up with solutions. Writing the narrative from a technical perspective will ensure that your narrative is taken seriously.

To find out whether your R&D Projects are eligible and whether your claim can be maximised, book a free consultation now.