Tax Breaks for Research and Development

Often, the tax authorities are seen as an imposition of bureaucracy, stifling innovation and entrepreneurship. However, in the context of research and development, H M Revenue and Customs have been given the task of using Treasury cash to encourage and support innovation. The relevant law allows companies undertaking qualifying R&D activities to claim some substantial advantages in respect of certain classes of expenditure related to that R&D. When a company involved in this type of R&D submits its annual corporation tax return, it can “uplift” the deduction it receives for that expenditure, so that:-

• If it is a profitable, tax-paying company, it can reduce its current or future tax bill, by a total of something in excess of 45% of the eligible expenditure; and
• If it is not making profits, it can “sell” the losses created, recovering in excess of 30% of the eligible expenditure.

Every year, at Richardsons, we claim, on behalf of our numerous innovative client companies, quite literally millions from HMRC in the form of reduced tax bills and payments of tax credit. If your company undertakes any form of investigation into innovative ways of making or doing things, or indeed simply into novel ways of providing your services, this generous tax break may be worth investigating. Please get in touch with Simon Husband or Tom Vigg or call one of us on 01844 261155.