R&D Tax Relief Myths

Research and Development (R&D) Tax Relief is only for companies that are inventing something brand new.

Not true. R&D Tax Relief is not just for inventing something new or getting a patent. It is also available, and most typically used by, companies that are improving or modifying an existing product or improving a manufacturing process—that is, making a product cleaner, quicker, greener, cheaper, improving yields, less waste etc.   Companies across all sectors including computer software, architecture, engineering, etc. are all good candidates for R&D Tax Relief.

R&D Tax Relief is only for companies with laboratories and test tubes.

Wrong.  While companies involved in basic research are clearly prime candidates for R&D Tax Relief, the relief is about encouraging applied science – solving a customer’s problem or a production issue using known scientific and/or technical principles.   Problem solving on the shop floor, in the field, on the site, behind a computer – all may eligible for R&D Tax Relief.

R&D Tax Relief isn’t for companies in my industry.

Think again. MSC has helped many businesses across the country claim the relief, including bio-tech and engineering firms and companies involved in everything from computer software and electronics to food processing, agriculture to chemicals and oil and gas industries. Self-censoring is the biggest block to companies taking advantage of the R&D Tax Relief system.

R&D Tax Relief is only for the big companies.

No, it is not. That is exactly what 80% of small and medium businesses (SME’s) think.  While the big companies, with their armies of tax accountants, are all over R&D Tax Relief, too often SME’s act as if there is something barring them from taking advantage of R&D Tax Relief.  R&D Tax Relief is available for SME’s, but you do need to present a case to get it – HMRC isn’t simply handing out tax breaks.

R&D tax relief won’t help my bottom line.

Incorrect.  MSC have delivered tax savings of many thousands of pounds for our clients, with an average claim value of £45k. The key to making successful claims is thanks to MSC’s intimate knowledge of the R&D Tax Relief system.

It’s all too good to be true – it must be snake oil.

Not so! R&D Tax Relief benefits thousands of companies a year and has been in place since 2000.  While HMRC isn’t giving away this tax relief – you need to have a technical business case that details your activities and correctly apply the law.

We are going to have tax reform and R&D Tax Relief is going to go away.

Very unlikely. R&D Tax Relief has been significantly improved over the last 6 years and operates in most EC Nations. It provides incentives for UK based Limited companies to invest in the kind of R&D projects which will keep UK plc. competitive and provide future investment and jobs.  It is likely that it will stay in place even with tax reform; in fact, it may well be improved, as it has been over previous years.  In many cases your business may be eligible to file an amended return and claim the relief for the previous two years – more money in your pocket to grow your business and create new jobs.

I don’t have time to spare collating information for a claim

Oh Dear! With an average claim value of £45k, which at 10% pre-tax profit equals a £450k order, how can you not afford the time to do it? We make the process very simple. Half an hour meeting to qualify the claim followed by a two-hour detailed technical meeting. Add to that half a day of your admin staff time to complete our pro forma templates and you’re done.

Common R&D tax relief myths