All digital businesses use technology, so why not get the taxman to contribute to the costs of development?
If there is some degree of innovation, and some challenges have been overcome in devising new campaigns or business methods, the expenditure on people and consultants probably qualifies for a rebate of tax you may not have even have paid in the first place. The government's research & development (R&D) tax credit scheme is like a bank loan you don't have to pay back.
If you think you can't claim money back for innovation, you are most probably wrong!
According to the Office for National Statistics, only 17,000 out of the 150,000 potentially qualifying companies are making claims for R&D tax relief!
The basic definition of qualifying R&D is whether the work "activity intended to achieve an advance in science or technology". So ask yourself - is your answer YES to any one of the follow questions set out by the Federation of Small Businesses? If so, you could potentially qualify for money back from the taxman:
- Have you done anything to develop new products/services or to improve or update your existing product/services?
- Do you produce custom products/services for individual clients to meet requirements?
- Do you sub-contract certain aspects of your business to access additional technical skills or additional resources, such as IT?
- Have you implemented new systems or software which were developed or customised specifically for your business?
- Have you had to change your processes, products, systems, devices or services because of new laws or new environmental regulations?
But you have just two years to claim and then it's gone!
There are many small companies losing out on these valuable R&D tax benefits simply because they do not realise that some of the work they do could qualify for those benefits.
At Beavis Morgan, we have made sizable claims for businesses in the marketing, media and creative industries. In fact, we have recently made substantial successful claims for an advertising business that had developed a workflow and project management software programme, as well as a media storage company that had developed a unique system for logging, storing and organising digital and analogue media files.
But it is down to the company to demonstrate to HMRC that it qualifies for the relief, and this can be a complex process.
The best initial step is to approach a specialist R&D tax adviser such as Beavis Morgan, who will be able to assess whether there is a likely claim and, if there is, assist you to make that claim successfully.
You can hear more from Steve Govey, R&D specialist at Beavis Morgan, by attending the IDM Business Leadership Programme starting in March.