What our customers say

“The team at North Hill deliver a great service. They provide forward thinking advice and value adding outcomes in a down to earth and approachable way.”

PAUL DACKOMBE, DIRECTOR, CITY CONCEPTS LTD

A welcome tax relief for SME's

SME's (small and medium-sized enterprises) for tax credit claim purposes are defined as not being in excess of:

• 500 employees

• €100m sales revenue

• Balance sheet total of €86m

Companies satisfying the above criteria are eligible to submit their claim under the SME scheme.

Note, larger companies in excess of the criteria above are eligible to make a claim under the RDEC scheme.

How much of a tax credit claim could my company make?

How much tax relief your company could claim from the R&D tax relief scheme depends on whether you are loss making or profit making.

A profit making company

If a company spent £100,000 on eligible R&D items, the corporation tax to be paid could be reduced by £24,700 (at a tax rate of 19%) as a result of the R&D claim (in addition to a £19,000 tax offset allowable without the claim).

The R&D claim to be made benefits from an enhanced expenditure allowance. That is, an additional 130% of the amount spent on R&D can be offset against the corporation tax bill.

Calculation example:

£600,000 : Profit before R&D claim

(£130,000) : R&D enhanced claim - i.e. £100,000 x 130% = £130,000 - note a £100,000 deduction is included within the £600,000 profit figure above

£470,000 : Amended proft

£89,300 : Corporation tax at 19% (£470,000 x 19% = £89,300)

£24,700 : Tax saving benefit from the R&D claim (£114,000 [i.e. £600,000 x 19%] less £89,300.

A loss making company

For a loss making company, a cash payable credit of up to 33.3% of eligible expenditure could be claimed.

Suppose a company spends £100,000 on qualifying R&D expenditure and the business made a loss for the the year of (£600,000).

A cash credit could be claimed for the year of £33,350 (see below).

Calculation example:

(£600,000) : Loss before R&D claim

(£130,000) : R&D enhanced claim - i.e. £100,000 x 130% = £130,000 - note a £100,000 deduction is included within the (£600,000) loss figure above

(£730,000) : Amended loss

£230,00 : Available maximum loss that can be surrendered to HMRC for relief (£100,000 x 230%)

£33,350 : Maximum available cash tax credit to receive (£230,000 x 14.5%)

Note, the company could elect to not surrender the R&D loss and instead carry if forward to offset against future taxable profits (at 19%).

R&D tax credits - an often overlooked opportunity

Many businesses overlook the opportunity of making a tax credit claim.

While some businesses (typically at the larger end of the scale) have defined research and development projects, many more still have hidden research and development i.e. spend that the business does not know would qualify for a claim!

As an R&D claim provider - we can find and determine claim opportunities that might otherwise be missed.

HMRC Definition of Research and Development

HMRC defines R&D as:

"Work that advances overall knowledge or capability in a field of science or technology, and projects and activities that help resolve scientific or technological uncertainties"

What type of spend qualifies for a research and development expenditure credit?

In accordance with the HMRC definition above, examples of qualifying expenditure include:

• Subcontractor costs related to R&D work (rules apply depending on whether or not the subcontractor is connected to the business)

• Externally provided workers - staffing provided through an external party which works on carrying out R&D activities in the pursuit of resolving technical problems and developing new methods

• Materials - consumable items which are either transformed or consumed within the R&D process to overcome challenges

• Staffing costs (after determining an accurate apportionment in respect of R&D work conducted)

• Software costs

The benefit of an ex-HMRC review team

The R&D claims service provided by North Hill is second to none.

As part of our process, we have a review of the claim made by a ex-HMRC support, which has worked within the R&D applications department for HMRC previously.

This enables us to identify in advance any contentious issues in the application before final submission to HMRC.

The benefit of technical specialists

We have Chartered Engineering support which brings to life from a technical sense, the advancements that may exist within a piece of new engineering design.

No rebate, no fee promise

We operate on a no rebate, no fee basis.

Therefore, if we make an assessment of your claim and establish that there is no innovative projects or other advancements to make a claim for, then we will not charge a penny!

We only charge once a cash benefit is received, the corporation tax bill paid is lowered by the amount of the R&D claim, and/or the application is approved by HMRC.

What does the process for making a claim look like?

The R&D process takes place as indicated below:

1) Commitment-free consultation

2) Evidence gathering

3) Estimated R&D claim

4) Report production

5) North Hill technical review (e.g. with ex-HMRC inspector team and technical specialists)

6) Final report submission to HMRC

7) R&D tax credit claim benefit received!

Want to get started? Contact us today!

If you'd like to a no commitment chat regarding making an R&D tax credit relief claim, then contact us today via the details on our contact page.

Benefits of working with us

“The team at North Hill deliver a great service. They provide forward thinking advice and value adding outcomes in a down to earth and approachable way.”

Paul Dackombe, Director, City Concepts LTD

About Mark O’Hanrahan