Many companies assume they are not eligible, seeing their activities as not R&D but “just” engineering, product development, or manufacturing. The term R&D tends to evoke academic or blue-sky concepts, but eligible work can extend into many practical fields such as manufacturing, engineering and software development. Importantly, improvements to existing products or processes can also encompass eligible work as the relief is not focused purely on new product development. Experience has shown that any company who has a technology basis for their business may have a claim. In certain circumstances, you may be able to claim even if being paid to carry out the work.
ela8 delivers quality expertise in R&D Tax relief at an affordable cost. We carry out a quick, efficient and seamless service though a small team of highly experienced professionals. Our background is from both technology and finance, meaning that we can understand the nature of your R&D activities and can then translate this into qualifying R&D expenditure in accordance with the legislation and guidance.Our clients range from large multinational corporate organisations to small start-ups and spin out companies and we have significant experience across a broad range of industries. Most importantly, our wealth of knowledge and experience means that we can tailor our work to suit your needs and your organisation. We are happy to work on a contingent fee basis (where our fee is proportional to the benefit actually achieved) so there is minimum risk in exploring the potential benefit.
breadth of experience and multi-disciplined team means that we can
provide a range of services to meet our clients’ needs, whether they are
small or medium sized business or large corporate organisations with
Skype ge.ela8 or tl.ela8Email us Here
the first step is to have a brief (approximately 30 mins)
discussion with you to understand at a very high level the company’s activities
or area of expertise in order that we can give you an idea of how best you can move forward
with the preparation of a claim. This initial conference call is entirely free and can even be conducted over Skype if you prefer. For this briefing call it is important to have some basic details available and also to have on the call, where possible, the most senior person available who understands the technological activities of the business (see below).
Alternatively, you can drop us an email with your contact details and any specific queries you have and we will get back to you. If you just want a quick opinion on whether you are likely to be doing eligible work, and feel your website gives a good overview of your company, just email this address to us. We will respond with our view and comments on the next steps.
Gareth Edwards, Managing Director of ela8 limited, was a director of the award-winning Deloitte R&D Tax Services team until April 2007 and since then has worked independently with a wide-range of clients, from international groups to small SMEs, to bring significant benefit to them through the submission of claims for R&D tax relief. Gareth’s background is as an R&D professional and entrepreneur and his continued interest and insight into technology means that he is able to understand the technological challenges faced by his clients and identify how their work meets the criteria for eligibility for R&D tax relief. Gareth is able to talk to the technical personnel within the business to extract from them the scope and basis for the R&D claims and to assist in presenting this in a way that the tax authorities will understand and accept.
Gareth has over 25 years experience of active R&D development, gained in a wide range of industries but specialising mostly in software, microelectronics, telecommunications and medical physics. He held a number of senior R&D posts for major international companies and ran his own SME hi-tech development and manufacturing company, before joining the R&D Tax Services team at Deloitte on its inception in 2003. This experience means he is able to understand and effectively operate with a wide range of companies and environments, and is able to communicate with technical specialists in their own language. He holds an MA from Cambridge University, is a Member of the Institute of Directors, and a Fellow of the Institute of Physics (email Here).
Teresa Latch's background until 2003 was in law and corporate tax work. From the introduction of the R&D tax relief regimes in the UK, Teresa worked within the Deloitte team providing a range of services to a client base ranging from the pharmaceutical industry to engineering consultancies, aerospace and defence equipment providers.
Teresa was one of the initial members of the Deloitte R&D Tax Services team and her experience in this sector since 2003 means that she has developed a good working relationship with HMRC, has prepared a significant number of claims for both SME and large companies and understands the key areas of difficulty that applicants face when putting together their claims, particularly as regards the quantification of the claims. She is a Batchelor of Laws and undertook her chartered accountancy training (ACA) whilst working for Andersen (email Here).
For more specific detail as to how we can help, please click Here.
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More guidance is planned to address a number of areas. This is great news and demonstrates a commitment to the SME regime, with the Government taking heed of advice from specialist consultancies such as ourselves on the effectiveness and failures of the existing legislation.
The increase in the additional deduction rate and removal of the PAYE/NIC cap will ensure that innovative start-ups and existing small businesses really see the benefit of this relief, even if they use third party expertise to help in their development work (through hiring expert contractors and/or subcontracting pieces of work).The change to a payable tax credit will be a big boost to loss-making Large Companies, and it is hoped that the regime will be kept as simple as possible. The falling corporation tax rates, though welcome, mean that the benefit of making R&D tax claims is reduced and it is important to keep the costs to claim as low as possible.
There are three key stages which are the same for both SMEs and large companies:
This regime was first introduced in April 2000 and is the most generous. In order to qualify as an SME, a company must meet certain criteria (which were revised from 1 August 2008):
These limits must be considered in the context of the company itself plus any related enterprises. A partner enterprise is any entity which is related by at least a 25% shareholding, and special rules apply where more than a 50% (controlling) shareholding is involved (linked enterprises). The simplest example is where an apparent SME is a wholly-owned subsidiary of a large group, and so is a large company itself for R&D tax purposes. The rules for aggregating the critical metrics are complicated, with some latitude for certain types of investment organisation - it is not always straightforward to determine the company status. Under certain conditions companies can even be linked through common ownership by individuals.
The SME regime also includes some rules regarding receipt of grants and other funding (including when being paid to do the work by another organisation) and also, for accounting periods ended before 9 December 2009, ownership of the IP resulting from the R&D efforts. Furthermore, where an SME is precluded from making a claim under the SME regime for a number of reasons it may be able to claim under the less-generous large company scheme - but care must then be taken to ensure that the large company regime rules are applied appropriately. These rules can be difficult to understand in practice and need careful consideration when preparing a claim.
The SME regime provides for an additional deduction of 100% (125% from 1 April 2012), giving an effective after-tax benefit up to 26% depending on the company’s corporation tax rate. For a loss-making SME, any losses generated through the R&D claim can be surrendered in exchange for a cash payment (“tax credit”) of up to 25% of the qualifying costs.
This regime was first introduced in April 2002 and applies to companies that are not SMEs (as defined above). For large companies, there are no rules relating to the receipt of grants or funding, or in respect of IP ownership. This regime intends to reward the company actually undertaking the R&D work, not those paying for it.
The large company regime provides for an additional deduction of 30% (25% up to 31 March 2008), giving an effective after-tax benefit of 7.8% for a company paying tax at 26%. For loss-making large companies, there is currently no option to surrender the R&D losses for a cash payment; the additional deduction in this case will only serve to increase the company’s trading loss which can be used in the usual ways under the corporation tax regime - in particular can be carried forward indefinitely. The 2012 budget proposed a new scheme for Large Companies which will allow a tax credit to be paid even if loss-making - this will come into force from 1 April 2013, see News.