innovate and grow.
Find out how we can help you claim
R&D tax incentives for your business.
Learn about the benefits
of the R&D tax scheme.
Pronovotech brings many years’
experience of managing client claims.
Pronovotech is a UK-based firm helping technology companies to claim tax incentives for research and development (R&D) work.
Many companies are claiming R&D tax benefits successfully, but many others either do not realise that they have eligible projects, worry that the claim process is too onerous and costly or, most commonly, ‘bundle’ the R&D claim as part of their broader tax and accounting affairs without a rigorous effort to optimise its scope.
Whether yours is a manufacturing, engineering, hi-tech or any other technology-based company, it is highly likely that you will have eligible work.
Maintaining a competitive position requires constant innovation and the Government’s R&D tax credit scheme is an important source of support for innovative projects.
Over £2 billion in support is claimed annually by UK businesses, but this still represents a substantial shortfall against the true extent of R&D being carried out in industry – many companies have still not claimed their entitlement, most commonly because they are unaware that they even qualify or because they believe that the claim process is onerous.
We offer a range of services related to R&D tax relief claims, tailored to suit clients’ individual needs:
- Full claim preparation – a turnkey service for complete claim preparation
- Technical support – preparation of technical description documentation supporting the scientific or technological basis for your claim
- Assistance dealing with HMRC enquiries
- Guidance – providing you with the know-how to prepare the claim in-house
- Ad hoc advice on R&D tax relief issues
We have worked successfully with clients across a wide range of sectors including aerospace, automotive, electronics, telecommunications, nanophysics, software and food
Benefits of the Scheme
The financial benefits of the R&D tax scheme can be substantial. For companies involved in innovative science and technology projects, defining the scope of their eligibility warrants special attention.
- Companies from a wide range of sectors can be eligible
- Even companies not paying corporation tax can benefit
- Tax benefits are available even if you’ve been paid to do the work, or received grant funding
- No minimum claim requirement
- Claims can be submitted up to two years after your year end
Frequently asked Questions
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.
The SME scheme works by allowing companies to ‘overstate’ their expenditure on R&D by applying an uplift, called a ‘superdeduction,’ to it. For SMEs, the superdeduction is currently 130%. Your tax benefit (unless you’re claiming under the RDEC scheme, below) will be the tax saved by claiming the superdeduction against your taxable profits.
For example, for an SME paying tax at 19% and spending £400k on R&D, the superdeduction at current rates will be £520k and the resulting tax benefit £98,800k. 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% of the R&D expenditure.
For large companies, the scheme operates effectively as a grant, calculated at a specified percentage of qualifying expenditure. In this case, the net benefit under the RDEC scheme is around 10%.
High-level guidance on defining your R&D projects and the costs that you can claim for is provided in our free download guide.
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 tax computations);
- 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.
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.
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.
HOW PRONOVOTECH CAN HELP YOUR BUSINESS
We offer a range of services related to R&D tax relief claims, tailored to suit clients’ individual needs.
We have broad experience of working with clients in a range of industry sectors, including aerospace, automotive, software, electronics, telecoms, utilities and food.
We set out the cost/benefit picture for a claim clearly, so that you can be sure that our service will deliver outstanding value for money. We maintain a strong relationship with HMRC and bring the right combination of expertise to the project to minimise the burden on your technical and financial staff.
As independent specialists focused on R&D tax relief, with an open, collaborative working style, we are able to work alongside your other financial and tax service providers with no conflict of interest or ‘scope overlap’ issues.
We’ve helped companies maximise their claims by applying our many years of specialist knowledge and experience. Your claim starts here.
“We’re a large group of manufacturing companies. We knew we had a lot of qualifying activity but were unsure how to go about identifying it, collecting the information or how to engage our busy technical team unused to working on tax initiatives. Pronovotech devised a programme to reach out to our engineering function, got their buy-in to the claim process and worked with our finance staff to gather the cost information efficiently. With their skill set they were able to work seamlessly and collaboratively with a range of business functions in a way we had never seen from any tax advisers before.”
Large Company Client
“We had asked our tax advisers to look into whether we qualified for R&D tax credits but after a brief investigation without talking to our development team they concluded we didn’t. A contact suggested speaking to Pronovotech. They came in and spoke to our technical leads about the work they had undertaken. We were impressed with their understanding of our technology and they were confident much of our work would qualify so we engaged them to help us put our first claim together, which was successful. We have since made several annual claims working with Pronovotech generating significant cash benefit for our early-stage technology business.”
“Our advisers had submitted a claim but when HMRC queried a number of aspects of the claim, it soon became clear they were unable to address the queries adequately. It also turned out they had claimed for some items they shouldn’t have. We sought help from Pronovotech who quickly identified where we had been going wrong. They were able to unravel the mess we were in, gain the confidence of HMRC in our R&D project and reach agreement resulting in a substantial part of our original claim being retained. We now use Pronovotech for our annual claims as we feel assured they are able to handle the process robustly”.
- Government launches new R&D consultation March 5, 2021
- PAYE cap draft legislation December 17, 2020
- Pronovotech’s thoughts regarding the recent CIOT guidelines on choosing an advisor for R&D tax claims November 11, 2020
WANT TO FIND OUT MORE?
Contact us using this form to find out more about the incentives available and how we could help you to claim them
Alternatively, feel free to call on us on: (01223) 422237.
Our postal address for all other enquiries and correspondence is:
St John’s Innovation Centre
Cambridge CB4 0WS