If this blog has piqued your interest, you are probably the business owner, or the finance director who has been lumbered with compiling the R&D claim for the company.
Costs of your time
Do you normally spend most of your daily job compiling R&D details? I am guessing the answer is no. Doing a R&D tax credit claim can take up a lot of time with the thorough attention to detail in a complex, and often puzzling tax system.
One would assume that doing something in house, rather than out-sourcing it would save money. But does it really?
Think of what you bring to the business in the normal course of your role, taking time away from your day job to do an R&D claim can significantly reduce productivity, and therefore the profit you are helping generate could be too.
Cost of over or under claiming
You can’t be an expert in everything, and R&D tax as a minefield, and one that keeps changing. Unless you are in this field as a specialist, I don’t think you can ever fully realise the intricacies involved in it.
As an example, you can not claim your rent as part of a R&D claim. However, if you rent a property that bundles in power and utilities with the rent, did you know that you can claim 10% of the total rent?
Knowing the boundaries of what you can and can not claim is important to make sure you are maximising your claim, but at the same time, that you are not claiming things where you shouldn’t. Rules can change from one year to the next, and if you over claim, it may mean a potential HMRC enquiry.
Case study from our R&D specialist, Tim.
A pharmaceuticals company I worked with paid £30k/year for a utility and rent package; looking back over 2 years I secured them an additional £2K. In another scenario, a client building a prototype for a heating system, had two employees – paid £100K in total – completing preparatory work for a month; I identified an extra £2.5K on top of the claim. Every little counts.
Cost of freedom (from stress)
Ok, so it isn’t a direct and measurable cost, but the impact of stress is very real. If tax is not your area of your expertise, then it is difficult to be completely at peace that everything that you have done, and claimed for, is correct.
With HMRC’s approach to procedures and policies constantly changing, coupled with a risk of under/overclaiming, it’s a heavy burden to shoulder
Cost of expertise
The biggest issue in all this, is the risk of not having the right expertise.
Your claim for R&D Tax credits will rely heavily on you having to draft and understand a technical specification of the project you are claiming R&D for. You could hire someone in on a temporary or contract basis to work with you or the FD on the claim, but why do that, when you can outsource the work to specialists who deal with it every day.
We work with an R&D specialist called Tim, whose passion it is to work with business owners like yourself and getting the right result for them.
Find out more about our R&D service here.