Rob Sowden of Bournemouth-based consultancy Business Cash Enabler reports a massive cashback of £185k for a business in the digital sector over the past two years, via HMRC’s Research & Development tax credit scheme.
Rob Sowden, innovation tax incentives specialist reports:
“I met with the managing director of this business two two years ago for the first time and since then they have benefited from £185k cashback under the HMRC R&D tax credit scheme. This is an incredible cash boost for the business that develops secure web-based apps running on mobile devices. Many businesses and their advisors haven’t associated the R&D tax credit scheme with software development, however, innovation including writing APIs, algorithms, coding, Big Data analytics and app development, can all potentially meet the scheme criteria. Apart from costs incurred via payroll, this client also incurs costs from offshore developers. However, they still qualified for rebates for qualifying subcontractor development because the costs were incurred by the UK registered entity.
“A trading company that carries out any form of unique innovation may qualify for a year-on-year cashback from HMRC under this very generous scheme. A company can claim back two accounting periods, or must have at least their first set of trading accounts. The £185k this company received was based on two retrospective claim years plus the current year. A business does not have to be profitable to get this cashback, in fact a loss-making company can obtain an enhanced cashback, up to 33% of qualifying staff costs can be rebated. Some businesses have claimed and received small amounts, maybe £10k or £20k, which is much less than they are entitled to. What catches many businesses out is that they believe this claim opportunity is an accountancy work-stream, whereas it is really about technology. The service I introduced this business to required a specialist software analyst to identify all of the qualifying activities permitted within the government’s scheme rules.”
Business Cash Enabler provides a free service to businesses to check eligibility for innovation tax incentives.