Engineering companies often perform Research and Development on a day to day basis. Electrical engineering is no exception. I often speak to business owners that know what they're doing may qualify as R&D but don’t know exactly which projects they can claim for, or for how much. This client was part of that group – and we were quickly able to help them define and claim for their electrical engineering R&D.
As a leading electrical engineering firm in South Wales, this company was used to solving complex issues for clients. These issues often relate to machinery or legacy systems. There was no doubt that some of the work conducted would meet the definition of electrical engineering R&D.
The client previously had an R&D Claims company to visit them. The agent handed over a question form for the client to fill out to determine what could be claimed. Zest took a much more hands-on approach – a big part of our job is minimizing the impact of making a claim on our clients’ business – whilst maximizing the value of their claim.
We had a 2-hour meeting that reviewed the clients’ previous projects in depth. We determined which projects were eligible as electrical engineering R&D and what costs could be included. During this meeting, most of the information needed to justify their claim was captured. A few emails and short phone calls over the following week, and a final set of claim documents were ready for the directors to review and approve.
As I expected for an electrical engineering company - there were several research and development projects the client had conducted. A few examples of these:
We were also able to advise the client on what costs would qualify, and why HMRC would deem they were the company conducting the R&D, not the company being sub-contracted to do so. This technical knowledge is critical to ensure there is no reason for HMRC to query the claim.
And because Zest acted quickly – we were able to submit a claim for the financial year 17/18 – before the window closed for their claim to be submitted. This meant the client did not miss out on £000’s of R&D tax credits for the work they had previously done.
In total, the process to create and approve the claim took about 10 days, and within a month of the claim being submitted – HMRC had paid the tax credits. You can see the owners' review on Google. Their expenditure over the 3 claim periods totaled over £97,000. That meant they received a tax credit for two previous years and a reduction in corporation tax this year which totaled over £23,000.
All-in-all a great result, and an example of how a well-managed R&D tax credit claim can be quick, painless, and effective when conducted by Zest R&D.
Chancellor Jeremy Hunt has announced a series of changes to the UK research and development (R&D) tax relief regime, including a cut to the deduction and credit rates for the SME scheme, the R&D tax credit. The rate of the large company scheme, the R&D expenditure credit (RDEC) will be increased from 13% to 20%, […]
HMRC has recently set out its upcoming reforms to the R&D Tax Relief schemes that will form part of the next Finance Bill. Alongside some minor legislation updates to address anomalies in the schemes, the reforms as they stand will cause four major changes to the schemes. The first of which could catch out start-ups, […]
If your company has been making a loss, it’s still worthwhile making a claim for R&D tax credits. This is sometimes misunderstood with people thinking that a company needs to be profitable to benefit. In fact, applying for R&D tax credits as a loss making company might be the most beneficial way to get the most from the scheme.