R&D Refunds – a decent reward for enterprise and entrepreneurship

30th September 2016

cash

“Try looking into that place where you dare not look! You’ll find me there, staring out at you!” So wrote Frank Herbert in his epic, Dune. What on earth has this to do with helping my cash flow? Well ……. plenty – read on.

Throughout my work with early stage organisations and even some of the slightly more mature cases I am often beset with the same problem from plaintive business owners and that is “we don’t have enough cash”. Now there are degrees of not having enough cash ranging from reduced end of year bonuses to not being able to make the VAT payments next Wednesday. Before I rush out to kick off another round of funding I always ask if all the natural hiding places have been probed. Ever aging debtors? VAT refunds? Outstanding investor subscriptions? One of the most surprising sources of cash that I have come across in the last decade is HMRC who have been positively bountiful with their staggering generosity in terms of R&D refunds. It is quite possibly one of the most undersold government business aids available today and it is available to every UK business. Your enterprise and entrepreneurship is recognised and better than that actually rewarded!

On multiple occasions over the last decade I have found HMRC to be the very antithesis of their popular Scrooge-like persona. I have recouped numerous 6 and even 7 figure sums for clients who have simply followed my advice which is “just make an R&D claim”. The qualification is a very simple one: if you have made a substantial investment in research and development and can fill in a simple template to justify ‘the spend’ then you probably can reclaim a substantial amount of that investment. If you don’t know if you have already made a claim then you probably haven’t, if your accountant has told you that its too hard and you probably don’t qualify and not to bother – change your accountant, if a large deposit into your current account is of no interest – stop reading now.

We all know that there is no such thing as a free lunch so where is the catch? To be perfectly honest – there isn’t one so get in quick before Teresa’s big-hearted open handedness stops. If your organisation has a modicum of financial nous you can do it yourself – if not get a specialist in but they will charge you up to 25% of your winnings once you get the pay-out. You will need to be able to justify in a proposal that you have spent the money on developing your ‘product’ and you will then be refunded at various rates, depending on whether you have employed permanent or freelance staff. There are also allowances for capital expenditure invested on your R&D. Any well-run organisation will have all this information at hand and it is well worth spending time and effort as HMRC like well constructed documents with all the relevant information in place.

How long does all this take? My last claim took 3 weeks from submission to agreement and we were then offered a tax credit or cash which arrived days after that.

My advice would be not to look this gift horse in the mouth before it is retired to stud.