R&D Tax Credits – Business continuity and support during these challenging times
The spread of coronavirus (COVID-19) is having a major impact on the way we go about our lives and our business.  The situation is changing daily but we wish to reassure all our existing and future clients that we have already instigated a comprehensive business continuity plan to ensure we are able to provide an uninterrupted service. All our R&D teams have the capability to work remotely and we have instigated a remote approach for all clients, facilitated by video conferencing, allowing us to deliver the same quality and format of service that you would normally receive in person. 

Help Line: Recognising the difficulties businesses are facing in trying to keep up to date with the details of the constantly changing financial support available and finding the information that matters to them, we have set up a help line to support you. We can’t promise to have all the answers at our fingertips as we all know some of these initiatives have yet to be firmed up by the Government, but your feedback will help us understand what you really want to know and focus our efforts on finding you the answers you need. Call us on 0114 263 2632




Initial Meeting


Facts and Figures

Submissions and Review


How R&D Tax Relief works

If a company incurs qualifying expenditure (in categories such as staff costs) on R&D it can enjoy an extra deduction from its taxable profits, so its corporation tax bill will be reduced. If the tax has already been paid, then a refund will be received from HMRC

For SMEs the rate of enhanced deduction is currently an extra 130%– meaning a cash saving of 24.7% of the eligible R&D cost. Not all SMEs (and particularly early stage start-ups) will have taxable profit, so an extra deduction from taxable profits would not be of immediate use to them.  Instead loss making SMEs can convert their losses (attributable to qualifying R&D spend) to cash, at a rate that currently amounts to approximately 33% of their qualifying spend on R&D

These reliefs for SMEs are very valuable and can provide cash at a critical stage to support  the continuing R&D effort.

For large companies there is the new and improved R and D expenditure Credit (RDEC) which provides a cash payment (taxable) of 13% of the qualifying R&D expenditure instead of a deduction from taxable profits. This credit is available even if the company has no other taxable profits


The rules of R&D Tax Credits

Of course there are rules.

The expenditure has to be on qualifying R&D, in line with a published definition. This definition is a broad based one that goes well beyond blue sky R&D and includes technological and software development up until the technological problems have been solved, and you have something which only requires minor adjustments before it can be used or  commercially released.

The expenditure on this R&D then has to be checked to make sure it is revenue in nature (rather than capital),  and meets rules covering what expenditure qualifies –  so for example there are special rules concerning subsidized or subcontracted expenditure, and rules defining  what expenditure falls into eligible categories


How to claim the R&D Tax Reliefs

Generally speaking you have two years from the end of an accounting period to claim the R&D tax relief for expenditure deducted in that period.

A company can  prepare and submit its own claims. However that means they have to understand how the R&D definition is applied in practice, master the detail of what expenditure qualifies under the rules, and also understand how to present this so HMRC understand it and are satisfied by it.

The alternative is for you to do what you do best – develop the technology and run your company – and to use a specialist like MSC R&D to prepare the claim for you.