7 Common Objections to Making an R&D Tax Credit Claim (Part 1)
Since establishing Fiscale in early 2014 we have spoken to many different businesses about R&D Tax Credit. We never cease to be amazed by the misconceptions that still surround the initiative, even after 15 years. Whilst the number and value of claims continues to increase there are so many more companies who could be benefitting from this incentive.
We have pulled together the top 7 most common objections raised when we broach the topic of R&D Tax Credit.
Objection 1: “What we do isn’t Research and Development”
This is probably the most frequent sentence we hear when talking to SMEs about R&D Tax Credit. Business owners simply don’t believe that they are carrying out Research and Development - they are just doing what they do on a daily basis to satisfy the requirements of their customer and keep them happy.
There are situations where the R&D activity isn’t immediately obvious. Take marketing for example. The guidelines from HMRC (HM Revenue and Customs) clearly state that the activity of marketing is not eligible for tax relief. Tell that to our client Precision Marketing Group!
By delving deeper into the activities that Precision carry out for their clients we discovered that as well as offering a wide range of traditional marketing services they also develop bespoke software applications. These applications are developed to meet the needs of their clients operating in the healthcare, property and public sectors.
When dealing with an experienced R&D Tax Credit Consultant you will find they are prepared to dig deeper into your business to uncover the pot of gold. Although they adopt a standard procedure to ensure the claim is processed as quickly and efficiently as possible consideration is given to the nature of the clients’ business. It’s not an automated approach instead each business is considered and analysed individually.
The secret to real success with the R&D Tax Credit Scheme lies in applying years of knowledge and investigative skills to get to grips with what it really is that a company does and how it does it. The quality of the claim submitted is defined by the quality of the questions that we ask.
If you are carrying out any form of eligible R&D activity rest assured it will be uncovered by our Technical Director, Stephen Bunting - aka the Sherlock Holmes of the R&D Tax Credit world. Stephen’s favourite reply to this problem is that, ‘Every company must continually try to improve their products and services to survive, and if they do not they will fail and if they were not sure if the improvements would work, then they should at least be thinking about R&D Tax Credit!’
Objection 2: “It sounds too good to be true”
We live in an age of email scams from rich Nigerian widows and automated phone calls from companies offering hundreds of pounds if you claim for mis-sold PPI. It is no wonder that we are a little sceptical of ‘schemes’ that seem too promise something for nothing!
The R & D Tax Credit initiative appears to offer just that. The thing to remember is that this is not a ‘scheme’ this is a statutory relief written into law. Of course the proviso is that you have to prove that you have invested time, money or resources into the R&D process to be eligible to claim in the first place. With the help of an R&D Tax Credit expert this is quite straight forward.
Successive governments have supported and enhanced the R&D Tax Credit Scheme because it is good for our economy. Since its inception in 2000 the initiative has helped to incentivise SMEs and larger companies to increase their investment in R&D activities. Over a 13 year period £9.5 billion has been claimed as tax relief or payable tax credits based on R&D investment of over £98.4 billion.
R&D is an essential part of the success strategy for UK PLC - we have to innovate if we are to compete on a global level. The government has motive in their madness!
If you are a bit sceptical take reassurance from Barry Caulkett, MD of BA Caulkett. Read through their case study - it might strike a chord.
Objection 3: “It’s a Government scheme it’s bound to be overly complicated”
Even companies who know that they are carrying out Research and Development are often reluctant to make a claim because of a perception that the scheme is too complex.
Over the past 15 years the process involved in submitting a claim has been simplified. It is now far easier for an SME to manage the submission process on their own. However, being guided by an expert, whose sole function is to maximise the value of the R&D Tax Credit claim and reduce the level of involvement for clients, is the most stress free and efficient way to maximise the benefit.
Read what Stuart Haycock, Operations Director at manufacturing company Icarus Training Systems had to say about the process.
Look out for the second part of our blog in November.
It could be you...
Would you like to find out if you are eligible to join the growing number of SMEs benefiting from the R&D Tax Credit scheme?
Simply call 01440 708333 and our friendly team will be happy to talk to you.
Our services are offered on a no win, no fee basis.