R&D Tax Credits
Is this scheme for real?
It certainly is. The R&D tax credit scheme iis the UK government's scheme to reward innovation in business and was introduced in 2000/01. It is one of the most generous funding schemes available for business. The most recent annual HMRC Report shows the average SME obtained £53k credit and the average Large Company £272k.
£3.7bn was paid out in the last reported year alone.
Can my accountant do my R&D Tax Credit claim?
Yes they can, but Business Cash Enabler provides a totally different level of service via a technologist-led approach. Each client will have a technical analyst assigned, such as a scientist, engineer or software specialist, who understands the client’s technical environment, to ensure that all qualifying projects are identified and claimed for. This approach invariably achieves around 100-200% increase on a claim that may be submitted via a client’s accountant. However, a client’s accountant will be kept in the loop and provided with all reports generated for submission to HMRC. Business Cash Enabler and its partners are not rival accountancy firms and do not take on any tax compliance work.
We don't do R&D
This is one of the main reasons that businesses have not claimed, due to a misunderstanding by them or by their professional advisors as to what constitutes R&D for the purpose of tax credits. If you carry out any activities that are close to the list below, we urge you to seek advice from Business Cash Enabler:
- Designing and producing new products
- Regularly changing the way you make products
- Developing or improving manufacturing processes or services
- Developing or integrating software, IT solutions or products in-house
- Have invested in failed projects or developed products not launched
- Employ any staff with a technical or scientific background
- Developed or improved materials or devices
- Developed samples, prototypes or undertake testing
Can we get a cash-back for R&D as we don’t pay corporation tax?
Certainly! As long as the company has qualifying activities and incurred costs for the same, it can obtain a cash-back, potentially year-on-year - even if it has never paid corporation tax!
To qualify a business must be a UK registered company and have been trading for at least one year with a set of trading accounts available. A company should be operating a payroll and/or paying for subcontractor labour for eligible activities.
How long does it take to obtain an R&D credit or cash-back?
The whole process generally takes around 8 weeks. HMRC R&D credits typically pay out within 30-42 days of a claim being filed.
How much could an R&D Tax Credit be?
In the latest report from HMRC, the average Small Medium Enterprise business received £53k for one year and the average credit under the Large Company scheme was £272k. A company can claim back for the prior two years for a first time claim and each qualifying year thereafter.
Will this process cost us if we aren't succesfull with a claim?
No. The claims management process works on a no-win-no-fee basis.
How likely is it that our claim will be approved and paid?
The service provided via Business Cash Enabler has been 100% succesful to date since starting out in 2006, with payouts on over £160 million in claim values.
Can you claim CBILS as well as R&D tax credits?
Many concerned clients and accountants have highlighted that the Coronavirus Business Interruption Loan Scheme (CBILS) is state aid and are concerned if that will impact R&D claims. HMRC have stated:
“The Government has notified CBILS as a State aid under the European Commission’s new Temporary Framework for COVID-19. The measure is a fully notified aid, so the restriction on receipt of other State aid (s1138(1)(a) CTA 2009) potentially applies, i.e. if the CBILS relates specifically to the company’s R&D expenditure [on a project] rather than being intended more generally to support the company”.
Therefore, if the loans are provided to generally support the company and are not provided to fund a specific R&D project then there will be no impact on the R&D claim.
Intellectual Property Services
What is Intellectual Property (IP)?
What is classed as IP?
IP includes trademarks, copyright, trade secrets and patents. It is in all cases an intangible asset that a company should value.
What is an inventive step?
To think about a patent, there needs to be a novelty in the process or product that creates new knowledge that doesn’t currently exist. These can be subtle and may be a small change or improvement compared to what currently exists in the market.
What is Prior Art?
Prior art is simply the current knowledge readily known in the market. It is of significant importance, and a common mistake made by many SMEs, that even before a new product hits the market, for instance if it is shown at a trade show, as soon as it’s ‘out there’, it is classed as prior art and the patent opportunity diminishes rapidly.
How do I get a patent?
The patent process is application based, through the Intellectual Property Office (IPO). The application usually includes a description of the product or process along with relevant diagrams to demonstrate the inventive step. The IPO will review and ask questions to understand the current knowledge and test the validity of the invention. Once they are satisfied, they will grant the patent which will be in place for up to 20 years.
Should I seek to discuss my IP?
- Have you made an R&D claim but never considered patents?
- Are you put off because of legal costs?
- Are you looking to raise funds?
- Do you want to maximise opportunities overseas?
- Could a patent look good in the shop window for funding or exit purposes?
- Can you reduce your tax payment thanks to IP?
What is an IP Harvest?
In order for an innovation to be eligible for patentability the claimed invention must, in the opinion of a patent examiner, satisfy three criteria:
- It must be novel
- It must involve an inventive (i.e. not obvious) step
- It must have industrial application
What are the key benefits of having an IP Harvest?
An IP Harvest (audit) may identify that the business can claim relief under HMRC's Patent Box relief scheme enabling the business to reduce its corporation tax rate to 10% on patentable income for years to come.
An IP Harvest is effectively an audit that will inform you of the potential of any patentable elements within your business.
An IP Harvest may in iteslef reveal that there is or coudl be significant intangible assets in your IP that creates a higher valuation of your your business.
Isn't it expensive to get a patent?
Businesses shouldn’t be intimidated by the legal and academic jargon surrounding IP. A fixed-fee “IP Harvest” – will answer the answer the question “Does my business have something worth patenting?” It’s not about Harvesting the whole field, rather finding that single blade of grass – that single, patentable idea that helps you to access HMRC’s Patent Box relief scheme and save thousands of pounds of corporation tax, year after year.
It may be possible to turn a potential gem into a significant tax benefit.
How can Business Cash Enabler help?
Business Cash Enabler work with experts that combine scientiﬁc and technical knowledge with particular expertise in IP strategy, whilst ensuring that you are is fully using the tax saving incentives that are available to innovative UK businesses. This service ensures monitoring of the legal, technical and ﬁnancial developments of tax relief schemes relating to IP so that you will always have advice that is up-to-date and reﬂects the best of current practice.
Get in touch for a no obligation conversation to see how you could derive value from your INTELLECTUAL PROPERTY
Who is eligile for this?
Any UK Company liable for Corporation Tax that holds interests in qualifying product or process patents whether owned or exclusively licensed can elect into the Patent Box regime.
What are other qualifying factors?
The claiming UK Limited Company needs to have undertaken the qualifying development on the patent and the patent needs to be registered in the name of the UK claimant company.
Companies must “scheme elect” to substantiate their claim within the rules of the scheme and actively claim their Patent Box benefit in the company’s annual Corporation Tax return.
You will need to identify and calculate the scheme qualifying profits realised from your company’s qualifying IP (patented product) income.
What's it worth?
Patent Box can create a profits deduction or a reduced tax rate on patent income.
100% relief is available from the 2017/18 tax year. For the 16/17 tax year the relief is 90% of the full benefit.
What if we are claiming under the R&D Tax Credit scheme?
R&D Tax Credits can be claimed in
addition to the Patent Box, enabling many companies to benefit from both schemes!
What if our patent is only a small part of a product?
Even if the patented element of the product is minor, 100% of income arising from the product could still fall into the scheme.
What if we have patents pending?
Profits generated from scheme qualifying product sold during the patent pending period qualify for the Patent Box following patent grant.
You can elect into the patent box scheme whilst your qualifying patent application is pending as the election date starts the date of relief, however you can normally reach back 1 year following the filing of the relevant tax return.
What if my company is loss making?
Some companies making a trading loss find that the patented products in their portfolio make a profit. Profits from relevant patented product can be carried forward and offset future years' patented product profits under a Patent Box scheme claim.
What's the benefit of using a professional consultancy?
Some companies are not claiming at all, when they could. This is not tax compliance and therefore may been missed as part of annual compliance.
The calculation to determine and optimise your Patent Box deduction requires a detailed understanding of the scheme and how income and costs are attributable under the regime, which is why many companies and their accountants work with a specialist to maximise the relief they should be gaining.
How does the process work?
Step1: To help you value your IP, a Product and Process IP audit is conducted on your business, to include:
- Identifying qualifying patents and recommending strategies to ensure your current IP qualifies.
- Advice on commercial adjustments to maximise your % of qualifying sales.
- Mapping your sales by qualifying and non-qualifying IP.
- Reviewing your R&D Tax Relief claims to identify opportunities to maximise both schemes.
The report is in itself a valuable audit
of your intangible IP assets.
Step 2: We handle your Patent Box claim:
- Preparing the necessary Technical and Financial election claim report.
- Maximising your Corporation Tax reduction.
- Recommending ways to maximise future claims.
- Work with your accountant to file your claim with your Corporation Tax return.
- Manage any HMRC queries regarding your claim.
Ensuring you gain full benefit from the scheme from the start.
Get in touch for a no obligation meeting to see how you could benefit from the PATENT BOX