R&D Tax Credit Opportunities

R&D tax credit opportunities

R&D tax credit opportunities

This is something that we find really interesting, government wants UK companies to innovate their way out of the downturn and are supporting this by providing R&D tax credits as a tax incentive that may reduce your company tax bill.

Your company or organisation can only claim R&D Relief if it is liable for Corporation Tax, and there are two distinct initiatives on offer. These are:

  • The Small or Medium-sized Enterprise (SME) Scheme
  • The Large Company Scheme

HMRC logoR&D for Small to Medium sized businesses (SMEs)

It is important that your business meets the criteria for SME, which as of 1st August 2008 is stated as:

A company or organisation with fewer than 500 employees and either of the following:

  • An annual turnover not exceeding €100 million
  • A balance sheet not exceeding €86 million

If your company belongs to a larger group or enterprise, it may not be considered an SME and subsequently fail these tests.

The Small and Medium sized Enterprise Scheme has higher rates of relief

From 1 April 2011, the tax relief on allowable R&D costs is 200 per cent – that is, for each £100 of qualifying costs, your company or organisation could have the income on which Corporation Tax is paid reduced by an additional £100 on top of the £100 spent. It also includes a payable credit in some circumstances.

Subject to Parliamentary approval, the rate will increase further to 225 per cent from 1 April 2012.

The Large Company Scheme

If your company exceeds the criteria for SME, then a claim is only possible under the Large Company Scheme.

Amount of expenditure for large companies

Tax relief is only available if you spend at a rate of at least £10,000 a year on qualifying R&D costs in an accounting period. The Chancellor announced in his Budget on 31 March 2011 that this limit would be removed for expenditure incurred on or after 1 April 2012. There is no upper limit.

Rate of tax relief

From 1 April 2008, the tax relief on allowable R&D costs is 130 per cent – that is, for each £100 of qualifying costs, your company or organisation could have the income on which Corporation Tax is paid reduced by an additional £30 on top of the £100 spent. If instead there is an allowable trading loss for the period, this can be increased by 30 per cent of the qualifying R&D costs – £30 for each £100 spent. This loss can be carried forwards or back in the normal way.

Which R&D projects might qualify for Relief?

HMRC have clearly defined R&D Relief in relation to a claim. If an R&D project seeks:

 “…to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty…”

The project cannot simply advance the companies own state of knowledge or capability.

Furthermore, for accounting periods ending before 9 December 2009, the project must satisfy both of the following conditions:

  • It must be related to your company or organisation’s trade – either an existing one, or one that you intend to start up based on the results of the R&D
  • If your company or organisation is claiming relief under the SME Scheme, it must own any intellectual property that might arise from the project

How to show the project is R&D within the tax definition

There are guidelines that define all the following terms, and it’s important to understand these concepts before attempting to reach a view on whether your company or organisation has an R&D project for tax purposes.

  • Project
  • Advance in science or technology
  • Science
  • Technology
  • Directly contribute
  • Scientific or technological uncertainty

Costs that qualify for R&D tax credit

Costs will be involved in the delivery of the project and the following qualify for R&D relief:

  • Employee costs – the employment of employees actively involved in carrying out R&D
  • Staff provider – paying a staff provider for staff provided to the company directly engaged in R&D
  • Materials – consumable materials directly involved in carrying out R&D
  • Payments to clinical trials volunteers
  • Utilities – power, water, fuel etc used in carrying out R&D – no phone or data costs can be included
  • Software – applications involved in carrying out R&D
  • Subcontracted R&D expenditure – potential for up to 65% of what is paid in R&D activity that is subcontracted
  • Capital Expenditure – Potential for R&D capital allowances claim on capital assets

For all additional information and some useful calculations, more information is on HMRC: http://www.hmrc.gov.uk/ct/forms-rates/claims/randd.htm

Please get in touch with us for facilitation and recommendations on suitable delivery partners.

 

Keeping ahead of industry developments and updates can seem a hard task, but we try and make it as easy as possible with our marketing news blogs.

Olympic Censorship: Know What Your Business Cannot Say

Olympic Censorship, know what your business can't say

Olympic Censorship, know what your business can't say

This summer the UK will play host to the 2012 Olympics. While your customers may be looking forward to it, as a business you need to be very careful with what you say. Or rather don’t say about the Olympics.

Unless you are an official Olympic sponsor, there are very strict rules about what words you can use or what images you can use in reference to the Olympics.

Unfortunately it’s quite serious and the way it’s been handled thus far suggests it’s not something that will only affect big businesses. As small businesses and individuals have suffered at the hands of LOGOC. (London Organising Committee of the Olympic Games.)

At the end of May a florist in Stoke-on-Trent wanted to show her support for Team GB and created a paper tissue display of the Olympic rings. She was then forced to take it down as she hadn’t received permission to use the logo.

This means that any deals, offers or sales you were thinking of having in celebration of the Games will have to be forgotten or rehashed to show no association to the Olympics.

Words

The use of Olympic related words in association with the Olympics is forbidden without prior written consent from LOGOC.
As mentioned above, this means any plans for ‘Olympic Deals’ will have to be forgotten. Changed to ‘Large global sporting event in the capital of the country over the summer deals’ perhaps?

The Olympic rings themselves. The five colours. The Olympic motto (Citius Altius Fortius / Faster Higher Stronger). And the words ‘Olympic(s)’, ‘Olympian(s)’ ‘Olympiad(s)’ or anything similar or a translation cannot be used.

The same goes for the Paralympic Games. Where the use of the Paralympic Symbol, the Paralympic motto (Spirit in Motion), the words ‘Paralympic(s)’, ‘Paralympiad(s)’, ‘Paralympian(s)’ or anything similar or a translation is also prohibited without prior written consent.

You can however refer to things factually. For example, if you run a sports centre you can still talk about your olympic sized swimming pool. If you run a hotel near a stadium hosting events for the Games, you can mention that.

A table of ‘Listed Words’ was produced by LOGOC, which if used, could end up in a visit from the ‘branding Police’.

A

‘Games’
‘Two Thousand and Twelve’
‘2012’
‘twenty twelve’

B

‘Gold’
‘Silver’
‘Bronze’
‘London’
‘medals’
‘sponsors’
‘summer’

You cannot use a combination of two words from Group A or one word from Group A combined with one or more word from Group B.

Images

The use of certain images is also risky. Though LOCOG say the use of these images may not immediately create an association with the Games.
When you read the list though, you’d be hard pushed to image how any of those couldn’t be associated with the Games.

The list includes;
• Olympic-style torch or flame.
• The five colours of the Olympic symbol.
• Use of the official designs for the 2012 Olympics or similar designs.
• Images of venues that will be used for Olympic events.
• Depiction of Olympic and/or Paralympic sports.
• Words which capture the essence of the 2012 Games and/or qualities associated with Olympism such as spirit, endeavour, friendship, winning or determination.

Visit the London 2012 website to view the full copy of the ‘Information On London 2012’s UK Statutory Marketing Right’s.’ 

It’s understandable that LOCOG want to help official sponsors get as much out of being an olympic sponsor as possible. But the restrictions placed on other businesses makes it hard for them to celebrate the Olympics with their customers.

Make sure you don’t get caught out this summer; know what you and your business can and cannot say.

 

Keeping ahead of industry developments can seem a hard task, but we try and make it as easy as possible with our marketing news blogs.

If you live in the Burntwood, Lichfield, Cannock or Staffordshire area and require some help or advice with your marketing, why not see what we can do. Take a look at our case studies, and call us on 01543 387047 and book a no obligation meeting with us today.