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News – 19.12.24
Buzzacott advises Rose Street Partners on its investment in Kenwood Damp Proofing PLC
Discover how Buzzacott supported Rose Street Partners on its investment in Kenwood Damp Proofing PLC … Read more
Insight – 18.12.24
Start-up guide: Everything you need to know about Tronc schemes to set your new hospitality business up for success
One challenge for new hospitality businesses is the management of tips and service charges. … Read more
Upcoming event – 16.01.25
VAT on Private School fees training
This in-depth, interactive training seminar is designed to provide school administrators, bursars, finance officers, accountants, and trustees with tailored support and expert insights on the practical implementation of VAT. … Read more
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Ordinarily, we see companies taking their R&D claim in-house for financial reasons, but more companies are considering this move to gain increased control over their claim. However, due to HMRC actively challenging claims, companies are often experiencing a detailed challenge to their claim in detail for the first time. While it makes sense to gain more control of the claim process, many companies are fearful to take this step. So Ordinarily, we see companies taking their R&D claim in-house for financial reasons, but more companies are considering this move to gain increased control over their claim. However, due to HMRC actively challenging claims, companies are often experiencing a detailed challenge to their claim in detail for the first time. While it makes sense to gain more control of the claim process, many companies are fearful to take this step. So Ordinarily, we see companies taking their R&D claim in-house for financial reasons, but more companies are considering this move to gain increased control over their claim. However, due to HMRC actively challenging claims, companies are often experiencing a detailed challenge to their claim in detail for the first time. While it makes sense to gain more control of the claim process, many companies are fearful to take this step.
By transitioning your claim in-house:
In addition, we also see companies considering automating their claim process by integrating it into their internal finance system. This allows the business to prepare claim estimates in near real-time and even automate the process in the future.
Despite its benefits, it’s not always right to take the claim process in-house. The main issue we see is limited company resourcing. However, this can be combatted by using an advisor to take the additional workload off the technical and financial teams. While preparing the technical documentation is time consuming, advisors hold familiarity with HMRC’s requirements and so errors in the documentation process can be minimised
HMRC has also been reviewing more R&D claims than ever, and in-house claims can easily incorporate errors if the team is not up to speed with the legislation. Therefore, although taking a claim in-house might appear to be cost-efficient, the risks of the transition may lead not lead to the retention of its benefits.
The starting point of preparing a claim is getting up to speed with the tax legislation and requirements to make a claim. HMRC provides an overview of this online that can be helpful but obtaining training and support is recommended. The legislation is also complex and can be misinterpreted so having a partner to support you through this process to test understanding is extremely important.
Preparing a claim requires the technical and financial teams to work together, which may prove to be difficult due to it being uncommon. Therefore, it’s required for templates and procedures to be set up so that both teams can agree on a similar approach and minimise mistakes. Buzzacott’s R&D specialists can help in setting up these templates and procedures as well as training.
Your technical team will need to allocate significant resources for tax compliance to prepare an R&D claim and will be responsible for:
This is the most time-consuming aspect of preparing a claim and is critical to avoiding an HMRC enquiry.
Treating the work to bring your claim into the company as a normal project is essential. The benefit can be significant so should you cut corners from any other projects generating this level of income?
Good project management principles should be utilised to ensure the transition to the in-house team is smooth and that the team holds synergy and time-relevant goals.
Like any other project, you should allocate someone to be responsible for QA and QC for the claim. Errors can creep into spreadsheets. But the costs need to track back to the GL/TB and accounts. The documentation that is supplied to HMRC needs to be straightforward enough to be understood and should be consistent throughout. Templates can help but avoid dependence on them. Someone will also need to monitor that the claim process as described by HMRC is being followed. Issues where the claim deviates from what is expected can cause HMRC to open queries. This is also another position where the employment of an advisor can increase the value to the process.
Your business will need to invest time and effort to ensure the R&D claim is accurate. Don’t let this go to waste for lack of consultation with an advisor. We can provide an independent party review of the claim and processes to provide comfort that the claim is not going to immediately trigger HMRC queries.
It’s worth having your existing claim checked before taking the process in-house to ensure that there are no misconceptions or errors being transferred across. Legislation and HMRC processes are changing so we can help you keep you up to date.
If you would like to speak to one of our R&D experts to find out more about how we can help, please get in touch via the form below.
R&D tax credits
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Iain Butler
28 July 2022
Submitting a R&D tax credits claim
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21 July 2022
Contact us
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