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R&D Tax rebate - run away!

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    R&D Tax rebate - run away!

    Looks like there may be another scam/scheme doing the rounds.
    I got an email today from a company that says they are R&D advisers, telling me to do a 17 second survey which would tell me how much of a tax rebate I could get based on running an LTD for over a year. They claim their average is £54k, with one company getting over £750k in rebates.
    I have checked the website out and the words "HMRC complaint" and similar phrases are all over it.

    I would strongly suggest that you ignore businesses like these as it is most likely a scam that will cost you in the long run.
    …Maybe we ain’t that young anymore

    #2
    Got to give it to them though. The number of contractors that don't understand rules and think that just coding something is R&D then it will be like taking candy from a baby...

    But absolutely what you say. R&D is complex and doesn't apply to a vast majority of us even if, in your blind greed, you think it does so don't get sucked in.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      And if you don’t due your due diligence and only come to this forum after you’ve been stung by HMRC, we’ll point you to this thread.

      Consider it pre-newbie flaming.
      "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
      - Voltaire/Benjamin Franklin/Anne Frank...

      Comment


        #4
        No harm in claiming R&D but you need to prove that you're using whatever is developed for your business and makes a profit. This is best done through a reputable accountant.
        I'm alright Jack

        Comment


          #5
          Originally posted by BlasterBates View Post
          No harm in claiming R&D but you need to prove that you're using whatever is developed for your business and makes a profit. This is best done through a reputable accountant.
          But that statement is what is wrong with the R&D argument. Far too simplistic and covers ever single service delivered which would mean absolutely every IT project going comes under R&D which it clearly doesn't.

          Tons of guidance out there but a nice summary would be

          R&D is separate from most operational activities performed by a corporation. The research and/or development is typically not performed with the expectation of immediate profit. Instead, it is expected to contribute to the long-term profitability of a company. R&D may lead to patents, copyrights, and trademarks as discoveries are made and products created.
          Implementing customisation to a COTS product like most projects will come under that definition of developed for your business and makes a profit but not way meets the criteria of the simple paragraph above.

          Also if you look at the gov definition nearly every project running to add/improve a clients operations via IT fails the criteria.

          https://www.gov.uk/guidance/corporat...ment-rd-relief

          Projects that count as R&D


          The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science, like economics, or a theoretical field, such as pure maths.

          The project must relate to your company’s trade, either an existing one, or one that you intend to start up based on the results of the R&D.

          To get R&D relief you need to explain how a project:
          • looked for an advance in science and technology
          • had to overcome uncertainty
          • tried to overcome this uncertainty
          • could not be easily worked out by a professional in the field

          Your project may research or develop a new process, product or service or improve on an existing one.
          Advances in the field


          Your project must aim to create an advance in the overall field, not just for your business. This means an advance cannot just be an existing technology that has been used for the first time in your sector.

          The process, product or service can still be an advance if it’s been developed by another company but is not publicly known or available.
          Show that a professional in the field could not work this out


          You should explain why a professional could not easily work out your advance.

          You can do this by showing that other attempts to find a solution had failed.

          You can also show that the people working on your project are professionals in that field and get them to explain the uncertainties involved.
          The company WTFH has warned us about (and there are more of them already out there looking at google) is playing on peoples misunderstanding of what it is so got to be careful with one liners like this.

          Maybe the point was use an accountant rather than focus on the scope of R&D and I've gone over the top but one thing you can take from all the posts we've had on R&D is that people really don't understand what it is.
          'CUK forum personality of 2011 - Winner - Yes really!!!!

          Comment


            #6
            Rule of thumb to tell if what you're doing is likely to be R&D or not. The answer to one simple question - how long will it take?

            If the answer is "I don't know", then it's probably R&D.

            I've used that a few times in response to the question, when the issue I'm working on is trying to figure out if an algorithm that even exists can be used to solve it. It involves doing research, hence the name.

            I guess some people just see the "D".
            Down with racism. Long live miscegenation!

            Comment


              #7
              HMRC are tightening down on R&D claims - if you are just claiming now you've probably missed the party....
              merely at clientco for the entertainment

              Comment


                #8
                Originally posted by eek View Post
                HMRC are tightening down on R&D claims - if you are just claiming now you've probably missed the party....
                It's a bit like "BUY THIS SHARE NOW"
                Down with racism. Long live miscegenation!

                Comment


                  #9
                  The way I see it.... and I might be wrong...

                  If I develop an RBAC model for a client, that is complex and uses a combination of techniques that are not documented by the software vendor(s) as a method to achieve the outcome. And of the outcome is unique. The this is R&D..... But..... the client can claim the tax credits not the contractor.


                  If a similar model is developed by the contractor, with a view to being sold to multiple customers, then the contractor company can claim R&D tax credits.

                  Seeing as most of what I develop is paid for by one client, and I then reuse portions of that for other clients it is arguable that I could claim tax credits., but the workload is low as I've already done it for customer 1. I'm happy with charging customer 2,3,4 the same money but for a lot less work.
                  See You Next Tuesday

                  Comment


                    #10
                    Originally posted by Lance View Post
                    The way I see it.... and I might be wrong...

                    If I develop an RBAC model for a client, that is complex and uses a combination of techniques that are not documented by the software vendor(s) as a method to achieve the outcome. And of the outcome is unique. The this is R&D..... But..... the client can claim the tax credits not the contractor.


                    If a similar model is developed by the contractor, with a view to being sold to multiple customers, then the contractor company can claim R&D tax credits.

                    Seeing as most of what I develop is paid for by one client, and I then reuse portions of that for other clients it is arguable that I could claim tax credits., but the workload is low as I've already done it for customer 1. I'm happy with charging customer 2,3,4 the same money but for a lot less work.
                    I don't agree with either of those to be honest but I'm really cold on this so maybe leaning way over the cautious line. New processes or customisations on a basic premise isn't creating anything new. It's still working within the constraints of a tool/application. Doing something a different or cleverer way isn't R&D. It's making a tool fit a need.

                    Again anything that a contractor can do in a short time to be sold on is 99% not going to be a scientific advancement or ground breaking. It's just providing a tool to supply an operational need to a client that just helps them sell their main product.

                    Even if what you created met the criteria, which I'm 100% sure it won't, then you can't claim tax credits on the the future sales either as you've now got a product, not researching a solution. But maybe I misunderstood that line.

                    It really does depend. I am sure there could be some scope for R&D at the cutting edge but for the majority of us developing solutions for client it's a no go.
                    Last edited by northernladuk; 5 October 2022, 11:12.
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

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