In this section we have tried to answer some of the more common questions you may have about R&D tax credits and the services we offer. Simply click the question to reveal the answer. If your question is not answered here, please feel free to contact
The scheme works by allowing companies to ‘overstate’ their expenditure on R&D by applying an uplift, called a superdeduction, to it. So, to arrive at a rough estimate of the tax benefit, you need to begin by (a) identifying the work that is likely to be eligible and then (b) assessing the qualifying costs associated with that work. High level guidance on defining your R&D projects and the costs that you can claim for is provided in our free download guide link. You’ll then have an estimate of your total R&D expenditure.
For SMEs, the superdeduction is currently 130% (125% before 1 April 2015,). For large companies, the t net benefit under the RDEC scheme is currently 8.8%.
Your tax benefit (unless you’re claiming under the RDEC scheme) will be the tax saved by claiming the superdeduction against your taxable profits. For example, for an SME paying tax at 20% and spending £400k on R&D, the superdeduction at current rates will be £520k and the resulting tax benefit £104k.
For SMEs that have incurred a loss in the accounting period, the benefit can be taken as a payable credit amounting to up to 33.35% (32.625% before 1 April 2015, and 24.75% before 1 April 2014) of the R&D expenditure.
Our services range from advice on particular aspects of the scheme with which you need help through to full management of the claim process. For the latter, we would normally begin with an exploratory meeting (no charge) to gain a high-level view of your company’s tax position and project portfolio; from this we can usually provide a reasonable estimate of the likely benefit and a proposal for doing the work for you.
Should you engage us, we will then meet with the appropriate members of your staff to acquire the technical and financial information necessary for us to prepare the claim documentation. As we build the documentation, we would liaise with your staff for reviews and any further input.
The claim would then be submitted with corporation tax returns - re-filed where necessary - and we would liaise with HMRC to progress and, if necessary, deal with any queries.
The extent of the work to identify the eligible projects, establish and collect
the associated costs and build the claim documentation depends on a number
of factors including the complexity and number of projects, the number of sites
involved and the availability of your staff for discussions. For a single site,
single project claim, we have completed the documentation in as little as three
elapsed weeks, including reviews and liaison with accountants as necessary.
HMRC has a 'customer charter' for processing R&D claims against which
it generally performs very well. Where your claim involves a payable credit,
you can usually expect notification within 30 days of submission. Where the
benefit will take the form of a reduction in tax liabilities, there may well
be no formal notification as such so we would seek to establish with HMRC that
the claim is accepted as early as possible following submission.
It is possible, therefore, that a straightforward claim can take as little
as 7-8 weeks from initiation to acceptance by HMRC.
There's no real hard-and-fast rule for this, but, for example, for traditional established manufacturers, it's likely to be in the range 1-5%, unless there is a special project or initiative in which the company is investing. For high-tech start ups it can easily be 80-90%. The main point is that if the percentage is out of kilter with broad expectations for the sector, we just have to make sure that we explain the reasons in the claim documentation.
This is a difficult question to answer because it depends on the scale and
complexity of the claim but it is possible to offer some general comments.
Our claim methodology provides the structure for the necessary discussions
and is designed to minimise the work that the claimant company has to carry
out but you’ll need to help us by:
(a) On the technical side:
• Describing the company’s work and helping us to identify the
potential R&D projects to include in the claim;
Discussing the technical details of the projects so that we can understand
them sufficiently to produce a draft technical report;
Reviewing the draft and working with us to finalise it.
(b) On the financial/tax side:
• Providing the initial financial information (including accounts and
Supplying any information that we need regarding company structure, business
relationships etc. to enable us to clearly establish the tax position;
Explaining the background to specific costs and any other aspects of the financial
data that we need to clarify;
Working with us as necessary to arrange submission, either directly or through
your usual channel.
In most cases our site work will amount to between one and three days at each
site (not necessarily consecutive); the follow-up work will largely be done
by phone and e-mail. The site work includes a short session on the scheme for
We work on the basis of daily rate, fixed price or contingent fee or a combination of these according to client preference. We believe that every single one of our clients will say that our fees are extremely competitive and represent outstanding value for money.
The fundamental criterion is the return for the client on our fees. Sometimes a very small claim can be extremely complex, in which case, following the exploratory discussions, it is clear that the cost/benefit ratio renders the claim non-viable. However, if the claim can be executed with a low number of days of work, then even a small claim can yield a substantial return on the cost of the claim process. The smallest claim that we have handled involved total R&D expenditure of just under £100k spread over two years, i.e. about £50k per year. We are very keen to see as many companies as possible taking advantage of the R&D tax scheme. One of our SME clients said that ‘although Pronovotech deals with major companies... this certainly did not stop them from taking our micro company seriously. The team took the trouble to discuss and examine our R&D activity and previous documentation in detail before putting together a swiftly produced and excellently presented claim - which led to an equally swift and excellent payment by HMRC.’
No – or at least, we haven’t encountered one yet! Our client list includes multi-national, multi-site corporations with claims involving a large number of projects. Our methodology and rigorous approach to managing the process ensures that the programme of activity is highly visible to all involved and that the claim project is run efficiently and to schedule.
Sometimes we are engaged to assist clients’ accountants and tax advisors with the claim process. Most often we are engaged directly by the client to manage the entire process; here we work with the client’s existing advisors (a) on acquiring the necessary information and (b) to submit the claim, since it forms part of the company’s usual CT return submission and, for accounting periods for which a return has yet to be made, would therefore go through the usual channels. Where the claim is retrospective and involves re-submission of past returns, we often submit directly but provide your accountants with full visibility.