ValueAdd - What We Do
Our Services
At ValueAdd, we offer a comprehensive range of services designed to support your R&D tax credit claims from start to finish. Our end-to-end service ensures that every aspect of your claim is handled with expertise and precision.
Claim Preparation
We prepare detailed and robust R&D technical reports for submission to HMRC, ensuring all necessary documentation is in place to support your claim.
Submission
We work closely with your accountant to submit your claim to HMRC, ensuring compliance with all guidelines and regulations.
Ongoing Support
Our support doesn’t end with the submission. We liaise with HMRC on your behalf, handle any queries, and ensure you receive your benefit promptly.
Consultancy
Upon the successful submission of your claim, we can work with you to set up processes for efficient tracking of future R&D projects and ensure the veracity of future submissions to ensure compliance, making future submissions more seamless.
Our Process
Our streamlined process is designed to make claiming R&D tax credits as simple and efficient as possible.
Step 1. Discovery and Eligibility Assessment:
We begin with an in-depth consultation to understand your business and projects.
Step 2. Information Gathering:
Our team collects all necessary data and documentation to support your claim, and works with you to ensure you’re comfortable with all of the definitions and the financials involved.
Step 3. Claim Preparation & Report Writing:
We prepare a detailed R&D report and Additional Information Form (AIF), highlighting your qualifying activities and expenditures.
Step 4. Approval and Submission:
We review the claim with you before submitting it to HMRC.
Step 5. Ongoing Support:
We provide continuous support, handling any HMRC queries and ensuring your claim is processed smoothly.
The R&D Scheme
Understanding R&D Tax Credits
The R&D tax relief schemes are government-backed incentives designed to encourage innovation across all sectors within the UK. These schemes allow businesses to recover a significant portion of their R&D expenditures, enabling them to reinvest in further innovation and growth.
Why Claim R&D Tax Credits?
Enhance your ROI
By understanding whether your investment can claim R&D tax relief you enhance your ability to plan and budget, thereby reducing further investment or shortening your payback period by claiming cash credits for qualifying activities.
Boost Cash Flow
Reduce your Corporation Tax liability or claim a cash credit for your R&D expenditure, and provide a cash injection for your business.
Stay Competitive
Invest in innovation and stay ahead of your competitors.
What Qualifies as R&D Work?
R&D activities can include a wide range of projects which seek to overcome technical challenges and achieve advancements in science or technology. Eligible costs can cover prototype materials, staffing, software, and qualifying indirect expenses. If your business is solving technical problems through trial and error, you may qualify for R&D tax credits.
Different Industries We Work With
Architects
Construction
Electrical Engineering
Health Sciences
Manufacturing
Software Development
Agriculture
Energy
Mechanical Engineering
Civil Engineering
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Choosing the Right Scheme
SME R&D Tax Relief
Designed for small and medium-sized enterprises (SMEs) with fewer than 500 employees and a turnover of under €100 million. This scheme allows companies to claim up to 230% of their qualifying R&D costs.
RDEC Scheme
Available for large companies with more than 500 employees or a turnover exceeding €100 million. The RDEC scheme offers a credit of 13% of your qualifying R&D expenditure. This credit is taxable but can be used to offset your tax liability or result in a cash payment if the company is not in profit.
Recent Changes and Updates
The R&D tax relief landscape is continually evolving. Recent updates include changes to the rates of relief and the introduction of new requirements for supporting information. For claim periods past 1 April 2024, the SME and RDEC schemes have been merged, simplifying the claiming process and promoting further R&D investments. We stay on top of all changes to provide you with up-to-date advice and ensure your claims are compliant.
What qualifies as R&D?
R&D stands for Research and Development, and qualifying activities typically include projects that seek to achieve an advance in science or technology. To qualify for R&D tax credits, your project must:
Address a Scientific or Technological Uncertainty This means the outcome of the project was unknown and couldn’t be easily deduced by a professional in the field.
Seek an Advance The project aims to make an advancement in the field, beyond mere cosmetic improvements or standard upgrades.
Involve Technical Challenges Overcoming these challenges should require a systematic investigation, experimentation or analysis.
Examples of qualifying activities include developing new products, processes or services, improving existing ones, or creating new software or IT solutions.
How much can I claim?
The amount you can claim depends on the R&D scheme applicable to your business:
SME R&D Tax Relief For small and medium-sized enterprises, you can claim up to 230% of your qualifying R&D costs. This means for every £100 spent on R&D, you can deduct £230 from your taxable profits. If the company is loss-making, you can opt for a payable credit worth up to 14.5% of the surrenderable loss. This scheme is merging with the Research & Development Expenditure Credit (RDEC) scheme and can only be used for claims with year ends before 1st April 2024.
RDEC Scheme For large companies, the (RDEC) scheme offers a credit of 13% of your qualifying R&D expenditure. This credit is taxable but can be used to offset your tax liability or result in a cash payment if the company is not in profit.
Merged Scheme (Accounting periods beginning on/after 1st April 2024) The government has announced changes to merge the SME and RDEC schemes into a single R&D relief scheme. This unified scheme aims to simplify the process and ensure consistency in how R&D activities are supported across all businesses. While the specific details and rates are subject to final confirmation, the merged scheme is expected to streamline the benefits and possibly offer new rates for R&D tax relief. It’s advisable to stay updated with HMRC announcements or consult with an R&D tax specialist such as us to understand how the new scheme may impact your claims.
Examples of potential claims under the different schemes
SME Example
Qualifying R&D Expenditure £100,000
Enhanced Deduction (230%) £230,000
Tax Saving (at 19% Corporation Tax Rate) £43,700
Payable Credit (for loss-making companies) Up to £33,350 (14.5% of £230,000 surrenderable loss pre April 2023 10.5% post April 2023)
RDEC Example
Qualifying R&D Expenditure £100,000
RDEC Rate 13%
Tax Credit £13,000 (subject to tax)
Merged Scheme Example (Hypothetical, subject to official rates):
Qualifying R&D Expenditure £100,000
Unified Relief Rate Let’s assume 15% (hypothetical for illustration)
Tax Credit £15,000 (subject to tax or direct cash benefit depending on the company’s tax position)
These examples provide a general idea of potential benefits under different schemes. For precise calculations and to maximize your claim, it’s best to consult with an R&D tax specialist who can tailor the claim to your specific circumstances and ensure compliance with the latest regulations.
How long does the process take?
The duration of the R&D tax credit claim process can vary:
Preparation: Collecting information and preparing the claim typically takes 2 – 6 weeks, depending on the complexity of the projects and the availability of documentation.
Submission: Once prepared, the claim is submitted to HMRC as part of your company’s corporation tax return.
Processing by HMRC: HMRC aims to process R&D claims within 28 days for SME claims and slightly longer for RDEC claims. However, the entire process from submission to receiving the benefit can take 2 – 3 months.
What if HMRC questions my claim?
If HMRC raises questions or requires further information about your claim:
Initial Review: HMRC may request additional documentation or clarification regarding the claimed activities and expenditures.
Response: We will help you prepare and submit a comprehensive response to address HMRC’s queries.
Outcome: Once HMRC is satisfied with the explanations and evidence provided, they will process your claim. If adjustments are needed, we will work with HMRC to resolve any issues.
Our team provides full support throughout this process, ensuring that your claim is robust and well-documented to minimise the risk of queries.
Can I claim for past projects?
Yes, you can claim R&D tax credits for past projects. You can typically claim for the last two accounting periods, for example:
If your company has a December year-end, you can claim for projects completed in the year ending December 2022 and December 2023.
If your accounting period is shorter or longer than 12 months, the time frame for claiming might differ.
It’s essential to review past projects and timelines comprehensively to ensure all qualifying activities and expenditures are captured accurately.