FSPA & Loughborough University IPR, Innovation and Research and Development Day

1. R&D Tax Relief:
Are you getting the
credit you deserve...?
Sports Technology
Institute, Loughborough
9 September 2010

2. (i) Overview of R&D tax relief schemes
(ii) R&D within sporting industries
(iii)Misconceptions and concerns....
(iv)Practical advice to maximise the relief
www.capitusgroup.co.uk

3. (i) Small or Medium Enterprise (SME) regime
(ii) Large Company Scheme
(iii) Qualifying expenditure
(iii) Research and development - definitions
www.capitusgroup.co.uk

4. Pre 1 August 2008 Post 1 August 2008
< 250 Employees < 500 Employees
and and
Annual turnover not Annual turnover not
exceeding €50m exceeding €100m
or or
Balance sheet totalling no Balance sheet totalling no
more than €43m more than €86m
www.capitusgroup.co.uk

5.  SME
• Corporation tax relief at 175% on expenditure.
• Equates to 15.75% saving on initial cost.
• Loss surrender for cash back at a rate of
24.5%.
 Large Company
• Corporation tax relief at 130% on expenditure.
• Equates to 8.4% saving on initial cost.
www.capitusgroup.co.uk

6. OR
Reduced Surrender
taxable profit loss
Revenue R&D expense £1,000,000 Qualifying R&D £1,000,000
Uplift at 75% £750,000 Uplift at 75% £750,000
Loss surrendered £1,750,000
Total deduction will result in:
Tax saved @ 21% of £367.5k Tax credit @ 14% £245k
www.capitusgroup.co.uk

7. Revenue expenditure uplift 130%
No surrender credit
Effective tax saving (at 28%) of
8.4% on expenditure
www.capitusgroup.co.uk

8.  Companies which receive funding for R&D
activities may not claim under the SME
Scheme.
 SMEs undertaking R&D on behalf of others
may not claim under the SME scheme.
www.capitusgroup.co.uk

9. • All companies:
◦ Staff costs (wages, employer NIC, pension but no BIK)
◦ Consumables
◦ Power, fuel, water used in R&D
◦ 65% of payments to agencies (externally provided workers)
• SME regime only:
◦ 65% of payments for R&D contracted out to others
• Large company regime only:
◦ Payments to qualifying bodies (e.g. universities) and
individuals
◦ Customer funded research (but not where customer is SME)
www.capitusgroup.co.uk

10. • Qualifying expenditure on Qualifying R&D
• 100% R&D allowances available
• Provides a permanent benefit for assets not
qualifying for other allowances and may be
claimed on buildings and facilities.
www.capitusgroup.co.uk

11. That seeks to
R&D takes To the resolution of
achieve an With activities
place when SCIENTIFIC OR
ADVANCE IN that DIRECTLY
there is a TECHNOLOGICAL
SCIENCE OR CONTRIBUTE
PROJECT UNCERTAINTY
TECHNOLOGY
www.capitusgroup.co.uk

12. R&D
Significantly enhanced Advance in
systems in terms of scalability, science/technology
speed, reliability, flexibility
and security AND
All this qualifies
Bringing together different Technologically
tools and testing compatibility uncertain
Maintenance Routine/Repeat
www.capitusgroup.co.uk

13.  Products, materials, services, processes...
 In house and contracted projects
 Improving, upgrading, integration...
 Aborted projects / unsuccessful projects
www.capitusgroup.co.uk

14.  Worried by H M Revenue and Customs?
 We don’t qualify?!
 We don’t have the resources!
 It will cost too much to claim!
www.capitusgroup.co.uk

15. • Coalition Government want to ‘...refocus R&D’
• Restrict Large Company Scheme?
• Restrict industries?
• Restrict rates for some and increase for
others?
www.capitusgroup.co.uk

16.  Consider R&D tax relief before
commencement of project.
 Include within budgeting and accounting
processes (and financing!!)
 Consider the costs which are incurred.
 Obtain guidance (and comfort)
www.capitusgroup.co.uk

17. Contact details:
Andrew Reid
Capitus Group
Email: reid@capitus.co.uk
Tel: 028 2564 7022
www.capitusgroup.co.uk