Alongside the schemes HMRC have released for both businesses and the self-employed there is some R&D guidance in response to the COVID-19 pandemic, the headlines of which are:
- HMRC are aiming to maintain the 28-day turnaround of SME claims for payable tax credits
- This suggests that HMRC are encouraging legitimate claimants to use the SME scheme as an alternative or additional method of boosting cashflow, in this fallow trading period.
- A company’s going concern status shouldn’t be impacted purely by COVID-19 for R&D purposes
- Obviously, if a company was not considered a going concern prior to the pandemic then they would not qualify for the scheme.
- The CBILS scheme is considered State Aid, therefore companies will need to be aware of this when using any borrowed funds on their R&D projects.
- Remember that any state aid funded R&D would not qualify for the SME scheme, only the RDEC scheme.
- The proposed changes to the PAYE and externally provided worker rules have been pushed back a year to the April 2021.
- This was to cap any lose making companies’ claim to three times the size of their total PAYE/NIC liabilities for the year of the claim. How claims up to 31st March 2021 will not be subjected to the cap.
Our previous R&D posts have talked about how far reaching qualifying R&D can be, and that is not just limited to the stereotypical industries such as medical research, software development and hi-tech engineering. Our experiences since setting up this service line have taken us to diverse businesses of all different sizes, all of which have shown remarkable innovations in their industry, be it food, horticulture or packaging. There is no restriction on industries that can claim, and government statistics suggests 100,000s of companies which could qualify for R&D tax relief are not claiming it.
We have also mentioned previously that the tax relief is one of the more generous available, which shows the importance the government places on innovation within the economy.
Although we appreciate many business owners may be in survival mode at present, we still encourage them to explore whether they have grounds to make a R&D claim.
For those that have made an R&D claim in the past or currently in the middle of pulling together information, we encourage you to expedite this process. It could potentially make a significant improvement to your cashflow for little effort.
Should you want any further advice on what to look for and the criteria of a valid claim feel free to contact our R&D manager Jack Spoor via: jspoor@robson-laidler.co.uk