Case Study: Cashback for your business with Research and Development Tax Relief

We’d like to share a case study with you for a client we recently saved £8,500 in Research & Development Tax Relief.

Our client works in software development. When they joined us as a client, they had heard about Research & Development tax relief but based on their circumstances they didn’t think they were eligible.  A quick review with our tax team gave them some unexpected news – they were entitled to make a claim to HMRC despite some unique circumstances for their company.  This is an area we recommend that most businesses consider investigating.  It could mean money back for you in the next 6 to 8 weeks.  It’s a quick two-stage process to determine if your business qualifies.

If eligible, you could be claiming back up to £33 of every £100 spent, where the expenditure qualifies as Research & Development. You might not expect it, but this can be found in any industry – it’s not just reserved for science and tech businesses – you just need to know what you are looking for.

CONSIDERING THE R&D TAX RELIEF CLAIM 

Our client is a limited company based in Northern Ireland. After undergoing some change in ownership, the new owner-director approached us to provide the finance function for the business.  Being in software development, we asked if the company had previously looked at possible R&D tax relief claims. The director understood that despite the fact that the company engaged in R&D activities, a claim could not be made as a customer who acquired R&D services from the company most likely submitted their own claim to HMRC.

We brought in our tax team to review the case.  They quickly determined that the company could submit a claim, not only for the current year but for an earlier year too.

WHAT HAPPENED

Our tax team carried out a detailed review of all possible R&D activities with the client.  This identified qualifying spend of £27,000 which generated tax relief of £61,000.  Tax relief was generated over 2 years.  In the most recent year, an extra bit of good news cropped up.

The extra tax breaks in the current year allowed the company to show a loss on its tax return, and under new loss relief measures introduced under a Coronavirus support measure, our tax team were able to move this extra loss back 3 years instead of the normal one year!

THE IMPACT

What did all this mean for the company in terms of its money?

Well, the company paid around £6,000 of corporation tax in the past two years. All of this was refunded to our client, along with an extra £2,500 tax refund due to the loss being carried back for a third financial year.5 -R&D Tax Relief Criteria

Our client is now £8,500 better off and will get cash paid into their bank account within the next few weeks.

HOW CAN WE HELP YOU

• First, we arrange a 15-minute qualification call to see if your business could be eligible for R&D Tax Relief
• We’ll then speak to our R&D Tax Consultant who will have a couple more technical questions
• They will confirm whether the activities fall into science & technology, what qualifies and what doesn’t within the claim, and the size of the claim

BOOK A CALL: You can book in a 15-minute scoping call with one of our team to find out if your business is eligible for R&D tax relief. Just drop us an email to hello@cloud360accounting,com with the subject, ‘I’d like to talk about R&D Tax’