Worth examining your R&D tax credit position

QAI own a traditional manufacturing business – many of our products have not changed in the last 30 years. Some years ago I was told by my accountant we don’t qualify for Research and Development tax credits, but similar businesses I know have claimed relief. Am I missing something? YOU are not alone. R&D tax relief has been available since 2000 during which time both the legislation and HMRC’s attitude have changed.

Recently, HMRC’s application has become more consistent.

Given you have manufactured for the last 30 years, it is unlikely you have not undertaken some form of research and development, because if you hadn’t you would not have survived given the tough economic and changing times.

Recently released official figures suggest that only 2 per cent of companies entitled to claim the relief do so.

A recent example was a new client – a pump manufacturer. Their view was they had been making the pump for many years so no R&D relief was due.

However, each pump made was bespokely modified and when the whole process was examined, they were able to claim relief on those parts which specifically fell within the R&D rules.

I suggest you revisit the position. It is possible to make a claim for the two earlier open years, so if your year end was October 30, you need to take action immediately as you could potentially make a claim for October 30, 2014 and October 30, 2015.

To make the claim, the October, 30 2014 amended return would need to be submitted to HMRC by October, 30 2016 – so time is of the essence.

A final word: the rules changed in April this year, restricting the ability to claim R&D relief on “consumables” so, act now to avoid losing relief from earlier years.

If your accountant is unable to help, give me a call; I will happily assist.