How to Get UK R&D Tax Relief with JunariCRM+
Fans of the Beatle’s George Harrison will perhaps recall the lyrics of his song “Taxman” which went something like “and my advice for those who’ve died, declare the pennies on your eyes, cause I’m the taxman”. Well, arguably HMRC doesn’t stoop quite as low as that even if Mr Harrison thought so – but corporation tax is a favourite exaction of theirs!
Just like any sensible business person out there – you for instance – we are always looking for ways in which to minimise our business liabilities and in particular the tax obligation that the company shoulders. If we can take a £1 of our hard earned revenue and not pay tax on it, preferring to invest that £1 in our future growth then we want to hear about it.
Now before you go getting as hot under the collar as a Starbucks cappuccino, we’re not talking about diverting profits away from the UK to minimise corporation tax payments or any wannabe-murky accounting practice that would have us featured on Jimmy Carr’s best buddies list!
No, no, no. What we are referring to is how we take advantage of the fantastic tax relief that the UK government itself is offering to all companies that perform Research & Development activity on projects that they are working on.
Happily the UK Government recognises that the effort of “UK plc” doing lots of excellent R&D will improve the UK’s economy with cutting edge product/service delivery and so they reward any qualifying expenditure with an effective 45% tax relief on such qualifying R&D expenditure. This is fantastic news for us – our Research & Development work is a continuous cycle of effort that ensures we understand what is valued by our customers and future target markets and therefore what will sell. Our R&D focus enables us to flex and grow to remain effective and efficient – two core business tenets – and so we invest a considerable amount of time and money in this activity.
- For Small or Medium-sized Enterprise (SME) Companies, since 1 April 2012, the tax relief on allowable R&D costs is 225% that is, for each £100 of qualifying costs, your company has the profits on which Corporation Tax is paid, reduced by an additional £125 on top of the £100 spent.
- Effectively this increases a company’s Corporation Tax relief on such expenditure from 20% to 45%, and is hence a very generous HMRC incentive.
- Furthermore any “excess tax losses” created from such a claim can either be carried forward in the normal way for relief against future profits of the same trade, or “surrendered” for an cash rebate at a rate of 11%
Now obviously, this R&D tax relief has been around in the UK since the early noughties BUT the difference now is that the relief value is higher (see sidebar) AND that the definition of what constitutes R&D expenditure has been widened. So listen up! This is a critical point for you; because R&D isn’t just about white-coated boffins working out the new pharmaceutical drug or next generation jet-engine. Now it can include anything that a business does which helps it improve its own processes, effectiveness and efficiency meaning that profit-growth is more possible. Specifically if your business project seeks to achieve an advance in overall knowledge or capability through the resolution of a technological uncertainty then you should be thinking about applying for R&D Relief.
And one of the specific costs that qualify for the relief calculation is software – computer software used directly in the advancement of business knowledge and capability.
Keeping it simple: A JunariCRM+ Implementation = More Tax Relief Opportunities
In simple terms therefore the JunariCRM+ product’s implementation costs and elements of its ongoing support can all be tax relief efficient. Because at the heart of the technology-uncertainty issue is how businesses find a suitable system to help them resolve blocks to business growth and blocks to their knowledge of the business patterns and dynamics. The investment in terms of time and capital outlay in resolving these core business issues is one that Junari assist all our clients with when tailoring our JunariCRM+ product to their exact process and innovation requirements.
Several of our clients have taken the project cost relating to their JunariCRM+ implementations and made them into successful R&D Relief claims – meaning that the already impressive return on investment that JunariCRM+ is delivering to our clients’ top-line is further leveraged by potential tax enhancement savings. It seemed a natural progression therefore to shout a bit more about this benefit and make it more obvious to everyone.
“Everything should be made as simple as possible, but not tax.”
Apologies to Albert Einstein for corrupting his quotation there – but the point is valid. There’s not a lot in the world of corporate tax that is dead simple. So in order to take advantage of the still rather complex and obfuscating tax guidelines you’re going to need to employ an expert.
Here at Junari we’re very happy to recommend Chris Annis at LB Group Chartered Accountants in Ipswich who has worked with us on our last two financial year R&D submissions. Chris is a great guy – defined by his pragmatic and proactive approach to achieving every drop of legal-tax relief that the government system allows. So if you need any help or advice then Chris can be reached on 01473 359720 or email Ipswich@lbgroupltd.com.
And if you’re interested in how you can achieve powerful business growth into your business (whilst also having the satisfaction of paying less Corporation Tax) then you need to speak to us.
Contact us on firstname.lastname@example.org or +44 (0)1206 625225