R&D tax relief of 230% – New Clearance Procedure for Small Companies

If you can demonstrate that what you are doing is innovative, not just in relation to previous knowledge, but also what is known generally, your expenditure in pursing this innovation, including staff costs, consumables and sub-contractors, can be multiplied by 2.3 when calculating the total amount to offset against profits for corporation tax purposes – that equates to 230% tax relief [From 1 April 2015].

Take up by companies is low despite the huge potential savings.

In order to be eligible your company must:

  • Have an annual turnover less than £2million
  • Have less than 50 employees
  • Have not claimed R&D tax relief before.

So if your company meets all these criteria you can apply to HMRC for advance assurance.

To do so you can fill in a form on-line, send accounts and registration details of your company and HMRC will contact your “nominated” person to talk about the companies activities in detail, either by phone or in person.

If HMRC are then satisfied that the company qualifies under the rules of the research and development scheme thy will send a written decision letter and you are free to claim 230% tax relief on the related expenditure.

If you would like advice or help with the clearance procedure and contacting HMRC call Winchester Bourne on 01962 715671 or email sarah@winchesterbourne.com