If you’re unfamiliar with R&D Tax Relief, it’s a scheme that can give companies investing in eligible research up to 33% cashback. The research needs to meet the tax definitions to qualify. In short, you need to be seeking to achieve a scientific or technological advance, overcoming a technological uncertainty in the process. Social sciences, such as pure maths, aren’t eligible.
Costs need to fit into one of the pre-set ‘cost buckets’: staffing costs, consumables, software, Externally Provided Workers, subcontracting, and independent research. Each category has its own eligibility rules and requirements, so you’ll need to do your homework. If you’ve already received a grant from somewhere else, that can further impact the amount you’re able to claim.
Submit these claims early. The earlier you submit, the earlier you’ll be approved and receive your credit. If you are particularly worried about cash flow in the near future, you could consider shortening your accounting/tax year so that you can claim sooner than originally planned. We’ve heard from HMRC officers that they recognise this as an important way to help innovative companies with cash flow, and that they are prioritising pay-outs on legitimate claimsContact Us
There are a number of companies which will lend against your R&D Tax Relief claims, so you can benefit from the credit immediately without waiting for HMRC to pay out.
They usually look for a track record of previous successful R&D claims, and a tax credit advisor to validate the claim. An advantage of the loan is that you can receive the tax credit cash more quickly, but this is in return for a drop in the eventual pay-out (due to loan interest, fees, etc.).
This is a way of ‘selling’ your invoices to a broker, typically by discounting the invoice value. The factoring company will also take a commission, in exchange for providing much-needed cash earlier than the payment terms on your invoices dictate.
This is also a way of distancing yourself from the payment collection process. Whether that becomes a positive or negative for your business depends on the broker. In many cases, they’re more likely to get payments in on time, but if they are particularly aggressive or unpleasant then your client relationships will suffer.
The Patent Box is an incentive which reduces the corporation tax rate for profits on patented products. If you have patents, are a profitable business (or were in the last two financial years) and you paid tax in the UK, then this is an option worth considering. Many companies aren’t currently in a situation to claim, but can lower their corporation tax bill with careful planning. You’ll need to make sure that, when the business is profitable, relevant products are covered by eligible patents. This patenting and commercialisation of new technology will in turn help the UK economy.
There are a number of tax relief schemes for companies investing in the creative industries such as video games, high-end television, animation, etc. These can provide tax relief, or a tax credit that returns up to 20% of the money spent.
The application process and subsequent submission to HMRC can be quite time consuming, so the earlier you can start your claim the better.
As part of the plans to offset Covid-19’s impact on the economy, the government has announced that companies can delay their VAT payments . The deferral is already in effect, and will apply until 30th June 2020.
All UK VAT-registered businesses are eligible, and this is an automatic offer with no application required. VAT returns still need to be submitted to HMRC as usual, and the VAT will still need to be paid to HMRC (just at a later date).
From 13th March 2020, SMEs can claim up to 2 weeks’ SSP per employee for workers who are off sick or self-isolating because of Covid-19. This can be claimed from day one, subject to various eligibility requirements and restrictions. Additional details can be found on the Government website.
This scheme is open to all UK employers for at least 3 months, starting from 1st March 2020. Businesses can put in claims for 80% of furloughed employees’ usual monthly wages, up to a maximum of £2,500 per month. Salaries can be supplemented up to the normal amount by the employer if desired.
Employees must have been on payroll as of 28th February 2020 to qualify. It is open to full-time and part-time workers, and employees on flexible or zero-hours contracts. The employee cannot work whilst furloughed, and this must last for at least three weeks.
The CIBLS offers loans up to £5m for smaller businesses across the UK. The scheme may be used for unsecured lending up to £250k, at the discretion of the lender. There are over 40 accredited lenders participating in the scheme.
If you do your homework, this might be one of the best ways to boost cash flow in the short term. The government will pay interest and fees on the loan for 12 months. One lender we spoke to said they would also agree to a 12-month repayment holiday, allowing businesses to potentially receive the loan and not need to pay anything for the first year.
There is also a number 10. Free advice from MMP
The team at MMP Tax wishes you well and urges you to stay safe during these uncertain times. For more information on this or any other IP matter, contact us or to speak to one of the Directors, call us on 0207 458 4108