R&D tax credit claims
ABGI has been managing R&D incentives for over 30 years for a broad range of international clients including some of the world's best-known brands. Most countries have tax benefits in the form of credits or enhanced deductions for R&D expenditure. Governments keen to attract R&D investment to encourage economic growth are constantly changing not just the incentives but also the rules, regulations and interpretations.
ABGI applies a unique methodology to navigate this complexity; a holistic approach to secure the maximum possible government funding for your organisation. Due to our blend of expertise and industry experience, we know where to look and how to go about identifying and capturing relevant spend in areas such as staff (direct and indirect), subcontractors, consumables, prototypes and software.
Our Innovation Funding Consultants gather all the information they need quickly and efficiently, peer-to-peer. We write the Technical Report, collate all the eligible costs and calculate the associated benefit for inclusion in your company tax return. Lastly, we take care of any queries from the relevant tax authority as enquiry defence is included free-of-charge with every claim we submit.
We do most of the work – making the whole process painless
We realise you have a business to run, so we’ve perfected a range of approaches that keeps your time commitment to an absolute minimum.
For example, when preparing R&D tax credit claims, our Innovation Funding Consultants gather all the information they need quickly and efficiently, peer-to-peer. We also write the Technical Report and handle any queries from the relevant tax authority. These are specialised, time-consuming activities that many providers leave to you.
We employ the best people, so you get the best results
Finding and securing the right innovation funding and incentives for your business requires a special blend of technology, tax and financial expertise.
At ABGI we employ a large team of highly professional post-graduate qualified scientists and engineers across all sectors, who undergo comprehensive and ongoing training on relevant legislation, regulation and tax guidance. The expertise and experience they have is second to none making us better equipped to find the right innovation funding and incentive solutions for your business.
We’re competitive, like you
As a commercially minded business like you, we operate in a highly competitive market. We welcome the opportunity to work with you because we are confident we can beat your current provider on service and results.
We're a pleasure to work with
Everyone at ABGI shares the same core values and these are reflected in everything we do. These include integrity, being supportive, always striving for excellence and challenging ourselves to deliver the best possible outcomes. We take this seriously - so every member of the team receives feedback on living the values twice yearly.
We feel this is important so that, as a client, you can feel confident and secure in your choice of provider, engaged in the process, understood and respected at all times, and completely satisfied with your experience from start to finish. This is why 98% of our clients rate our service as ‘Excellent’.
Accelerating innovation is what we do
Boasting a combined total of more than 70 years’ experience of carrying out claims for innovation incentives, our Innovation Funding Consultants have submitted over 5,000 claims for over 1,500 clients in the UK. So, while you might feel that only you know where your costs lie, chances are we’ve worked with a business very similar to yours. We know exactly where to look and how to go about identifying and capturing relevant spend – in areas such as staff (direct and indirect), subcontractors, consumables, prototypes and software.
We have a great working relationship with HMRC
Earning the trust of tax authorities internationally is a cornerstone of our global business. In the UK, we deal with HMRC on a daily basis and have built up a very good relationship with them over the past 10 years. HMRC see us as experienced, knowledgeable and reliable – reflected in our impressively small 0.5% challenge rate for R&D tax credit claims.
We'll minimise any potential risk to your business
While they can bring financial reward, applying for funding and securing tax incentives can also expose a business to risk, if not managed properly. Taking tax incentives as an example, HMRC’s every evolving interpretation of what qualifies makes it more important than ever to submit accurate and robust claims. Given our track record, HMRC only spot-check a very small percentage of our claims and we’ve defended each of them successfully.
We take a holistic approach
Making the most of the tax incentives available to your business is about identifying all your eligible activities and capturing all your relevant expenditure, while complying with HMRC’s strict requirements.
As technicians who understand the innovation challenges you face and the technological advances you’re trying to achieve, you can rely on us to find more eligible activity than anyone else. Accountants, for example, only understand finance, while other so-called specialists have, at best, a purely financial background.
We take quality very seriously
We are one of the few tax incentive and innovation management advisers to have ISO9001 accreditation. All our processes are independently audited and verified annually, so you can rest assured they’re robust, proven and do everything they’re meant to do.
We’re flexible too
We’ll tailor our approach to you. ISO9001 provides a useful framework for our internal processes but we’ll fit in around your priorities and preferred way of working.
The R&D Tax Relief Scheme
Introduced by the UK Government in 2000, the R&D tax relief scheme is designed to encourage innovation and global competitiveness by allowing companies to reclaim some of the money invested in qualifying research and development.
What constitutes R&D for most people may be very different from HMRC’s interpretation. According to HMRC, a company is undertaking R&D when they are 1) overcoming technological uncertainties aimed at, 2) achieving an advance in technology and 3) which isn’t readily deducible by a competent professional.
The effect of an R&D tax claim is to reduce taxable profits or increase taxable losses. The claim can reduce profits, reduce profits and create a loss, or increase pre-tax losses. There are three main types of tax benefit that arise from a successful claim for R&D Tax Relief – these are 1) a payable cash credit, 2) a rebate of corporation tax and 3) an enhanced deduction that can be carried forward.
You can go back two full financial years (that’s your company’s financial year, not ‘tax’ years).
This is irrelevant for the purposes of the scheme – it’s the R&D activity that’s important, not the outcome of the project.
R&D Tax Credits Eligibility
For eligible projects, it is the money spent on salaries, externally provided workers, subcontractors, software, utilities and materials ‘consumed or transformed’, such as chemicals, materials, batteries and certain forms of tooling.
Subcontracting can be a tricky situation in an R&D tax credit claim, but it doesn’t necessarily mean you can’t claim. You need to be very sure about your contractual situation, the work you are contracted to do and who is bearing the brunt of the cost, as all these can have an effect on the eligibility of subcontracted work.
Under the SME scheme, 65% of payments to sub-contractors can be claimed except if the SME is connected to the sub-contractor (e.g. is its parent, part of the same group, or are under common control). The rules are different for connected sub-contractors.
No. There is no requirement that the sub-contractor should be in the UK. However, it is important that the sub-contractor is engaged to perform a specific task rather than providing a service.
R&D Tax Relief & HMRC
No. This is a Government scheme fully supported by the Treasury and HMRC. In fact HMRC recently announced a number of measures to make the scheme easier to access.
Although the majority of claims will be processed by HMRC without the need for further information, some are not so fortunate.
This process is call and enquiry and can happen because:
HMRC are looking at other tax issues related to your business, and your R&D claim will be included.
- You've claimed before, but this claim is much larger.
- You're technical justification is insufficient, or not compelling.
- Your claim focusses on a technology which HMRC are seeing more often - and they want to ensure a consistent approach.
HMRC might have a simple question, or could ask for emails, spreadsheets, invoices, contracts and other correspondence.
To date, 1.2% of our claims have been subject to an HMRC enquiry. We have successfully defended all of them.
No. This is a Government scheme fully supported by the Treasury and HMRC. It has been in operation since 2000.
R&D Tax Relief & HMRC
We do most of the work. Larger claims will often (but not always) take longer than smaller claims. We need to understand the projects you carried out, establish qualifying R&D and capture the costs associated with that R&D activity. We absolutely want to keep your time-commitment to a minimum.
Clients normally get their money 4-6 weeks after submission. Our quickest time from submission to payment was 1 week!
From April 2017, SMEs can recover up to 26% (if in profit) and 33.35% (if loss-making) of eligible expenditure, while Large Companies can claim back up to 12% (subject to Corporation Tax).
Generally, an SME is a company of up to 500 people, with revenues of less than €100m or balance sheet assets of less than €86m.
Yes, there are two schemes for R&D tax relief. One is for SMEs and the other is for Large Companies.
Only Limited Companies can claim because they pay corporation tax. Partnerships, Charities and Sole Traders cannot claim.
R&D tax claims and accountants
Simply choosing an accountant to manage a claim is based on the assumption that it is a tax process. A robust, accurate and successful claim is actually largely focussed on technology. The majority of accountants do not have the resources to employ technical experts (scientists, engineers, chemists, software experts) and will therefore not understand what you do, how you do it, the context of your projects and known industry alternatives. They will therefore generally submit conservative claims for less than your legitimate entitlement.
That may well be the case. However, as R&D Tax Specialists, we can often find genuine eligibility where a non-specialist (most Accountants) cannot. Get in touch with us to talk it through.
Yes – we have worked with many Accountants over the years. Contact us to find out how we can work together.
Grants and subsidies can move a portion (or all) of an SME’s project from the SME scheme to the RDEC scheme. It is therefore possible – and relatively common – for SMEs to be able to claim under both schemes for one or more projects.
As a rough rule of thumb - If an SME gets a grant or subsidy that is State Aid, that project’s claim may have to go through the RDEC scheme.
If an SME gets a grant or subsidy that is not State Aid, its claim can be split between the SME and RDEC schemes. Large Companies are not affected by grants and subsidies.
Yes. The crucial thing is that companies have to be spending money, and the more they have spent on eligible activities, the greater the benefit and some loss-making companies may be eligible to receive a cash credit.
An R&D claim enquiry defence is included in our fee. Every claim we submit to HMRC goes through our rigorous process and we have the utmost confidence in its accuracy. We will robustly defend any claim submitted on behalf of our clients
Our fee rates are negotiable and always competitive - contact us for a quote.
Yes, you can. Please contact us for more details.