The government announced that the amount of unclaimed research and development allowances by UK companies was millions and in fact less than 0.5% of UK companies were submitting such claims. So why is this?

Our experience has highlighted a misconception by many. The usual perception is that businesses have to be involved in “research” and often people visualise laboratories and white coats. In fact this is not true. If you were to concentrate on the term used by HMRC “development” and thought about technology rather than science, the scope of making a claim becomes much larger. If your business works with technology and is involved in the creation, advancement or development of such, then there may well be a claim to be made.

For example, particular industries that should be aware of such claims are high tech, precision and electronic engineering, IT related activities and manufacturing. Many of our clients where we have claimed Research and Development allowances have been surprised this form of tax relief applies to them and once it has been established that you are indeed an R&D company, the claims can be very beneficial. A typical repayment for a small company could easily be thousands of pounds on an annual basis.

Providing the relevant conditions are met, an R&D company can uplift the qualifying R&D costs by 75%! Depending on the results of the company this can significantly reduce the corporation tax bill. It may alternatively be possible to reclaim PAYE/NI paid by the company thereby improving cashflow.