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Most of the leading Accountancy firms such as KPMG, Deloitte, Price Waterhouse Cooper and Grant Thornton have specific units within their organisations to cater for this highly specialist tax areas. These units are invariably staffed with scientists and technologists and have significant overhead costs associated with them, generally funded by large R&D Tax scheme claimants with multimillion pound claim profiles.
However, smaller, dynamic practices, such as yours, can also offer these additional services to companies other than large corporations and without those prohibitive associated costs. By forming an important relationship with GGTC, Government Grants and Tax Consultant, a specialised financial services company, you could deliver enhanced client services in the area of R&D Tax Credits.
Who are GGTC?
GGTC were formed in 2006, although partners involved in the business have been associated with accountants on R&D Tax Credit claims since 2001. Whilst GGTC have partnerships with accountants they are not an accountancy firm and therefore your client relationship will remain as before.
To date GGTC have processed over £30m of R&D Tax Credit claims for well in excess of 400 clients making us the leading handler of claims on behalf of small and medium sized businesses. During this time they have developed an in depth knowledge of the R&D Tax Credit scheme and are able to define claim opportunities quickly and maximise claim potential. GGTC have the resources and technical expertise to offer a full service to businesses that represents real value particularly to SME’s who couldn’t afford the fees of the large accountancy firms.
Importantly, GGTC have formed a good working relationship with HMRC and understand their processes and qualifying requirements on what is a complex area of taxation. This ensures that all R&D Tax Credit claims submitted will stand up to the robust scrutiny that can be expected by HMRC, thus ensuring compliance and avoiding unnecessary penalties and potential fines. Additionally, GGTC will deal strongly with any challenges, queries or inquiries made by HMRC on behalf of clients.
We will conduct the initial R&D Tax Credit Claim opportunity free of charge and then operate entirely on “no claim recovered -no fee” basis -except for a small set up fee.
Working with GGTC
GGTC build strong relationships with;
Customer R&D Tax Credit Claim Process
What are the issues around the R&D Tax Credit Schemes?
The original R&D Tax Credit scheme was an EU initiative that was aimed at SME’s and was designed to allow some recovery of development costs that companies had invested or would invest in the future into innovative product and manufacturing processes.
The British Government, following pressure from industry and the CBI introduced a scheme for big companies. Although the schemes are different they both have bearing on SME’s as quite often the activities of the SME are defined as subcontracting R&D for the big companies and claims have to be made in either that scheme or both schemes at the same time. The R&D tax credit scheme is a key part of the Governments strategy to boost innovation in business. Credits reduce the real cost of investment, improving products and processes.
The UK government introduced of a big company scheme had detrimental effects on the SME scheme as benefits such as tax credits do not apply to R&D subcontracting SME’s. Additionally, the scheme was modified from the 1st April 2008 reducing the retrospective claims down from 6 years to just 2 prior years and at the same time increasing the claim benefits, in the case of small businesses to 75% and large companies to 50%.
HMRC believes there are potentially over 150,000 SME’s alone that could benefit from the scheme. However, the off take to date remains relatively low, particularly in comparison to Europe, at around 6,600 SME companies for the financial year 2008-2009, receiving £40,000 on average. Whilst during the last few years a greater proportion of the eligible big companies have made full use of the scheme.
The fundamental problems for SME businesses are, the distrust of government in general, the concern about success if resources are committed to a claim and the general complexity of Government schemes anyway. In addition, the communication and marketing of the scheme has been poor the responsibility unclear as to the rules with HMRC even disputing the DTI’s original guidelines on the definitions of the scheme and how it should work.
Or definitions for R&D such as:
These terms need to be put into everyday language businesses understand.
Why not make R&D Tax Credit claims ourselves?
Preparing an R&D claim is not something that can easily be performed solely by the company, it’s Finance department or by their accountants in isolation, unlike many other aspects of company tax. The scheme itself is complex and extremely people resource intensive.
When the Government introduced the R&D Tax Credit scheme it made a conscious decision that HMRC would not employ scientists or engineers to assess the validity of R&D Tax Credit claims. Their idea was that the technical staff performing the R&D or innovation would be the ones best equipped to make the assessment as to what actually qualifies for R&D Tax Credit relief.
Therefore the onus is on the company’s technical staff to determine with certainty the scientific or technological solution, or the lack of it, which determines if the R&D or innovation is actually being performed. This goes for even the smallest company. The R&D Tax Credit scheme is not black and white in its definition and requires a great deal of knowledge and experience.
It is essential to submit an R&D Tax Credit claim that is both detailed and supportable to HMRC. In the event of HMRC raising a query or an enquiry, it will require the staff carrying out the R&D to provide their input into the claim and do this in a way which complies with the requirements of the legislation and reflects them onto the company’s own activities.
For the tax benefit to be understood it is vital from the outset that the technical staff know what qualifies as R&D for tax purposes. Unlike many other areas of tax, the technicians, engineers or scientists play a key role in preparing an R&D Tax Credit claim.
To make the claim itself a company needs to assess whether it can perform adequately these tasks.
The reality is often like this;
This scenario is almost guaranteed to ensure that an incorrect claim is made, with the potential of an enquiry from HMRC resulting in penalties and delays.
GGTC have helped a number of accountancy practices achieve significant business growth, with their clients qualifying for R&D Tax Credit payments averaging £40k a year.
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