Research and Development (R&D) tax credits in the UK provide innovative businesses with extra cash to invest in their development activiites - find out more about what the are and which businesses are benefiting.

1. Who’s Claiming
R&D Tax
Credits?
Who’s Claiming
R&D Tax
Credits? By Linda Eziquiel
Principal Consultant
RandDTax

2. How big is the pie?
£1.3 Billion
In 2015-16
£1.3 billion went to UK
companies with less than
500 employees (SMEs)

3. Any company that is
spending time or money
on developing things…
Who can claim?Who can claim?
…such as a new or improved
- process
- material
- device
- product
- or service

4. So long as their
developments involved:
working in the physical
world of things –
substances, materials etc.
or developing technology
- hardware
- software
- machinery
…and were more complex
than just routine activities.

5. 2014-15
30%
Other
Information &
communication tech.
25%
Professional,
scientific & technical
18%
Wholesale &
retail trades
18%
Which industries benefit most?Which industries benefit most?
9%
Manufacturing
2014-15 all claims

6. How much are R&D claims worth?
The benefit is between
18% and 33% of your total
R&D costs each year
Costs include: staff salaries,
sub-contractors and consumables
such as energy and wasted materials.

7. Application software developers
Software developers
Brewers
Financial Services
Legal Firms Bailiffs
Winch makers
Test and Calibration companies
Manufacturers of machineryEngineering companies
Designer and manufacturer of industrial components
Refurbishing of industrial components
Injection Moulding
Industrial process control systems
Motor Industry
Manufacturers
IT infrastructure
Ice Cream Security Systems
Some types of claimant industry / company

8. • Precision Engineering
• Licenced Software
• Ice Cream Maker
Three Case Studies

9. 1. Precision Engineering – the R&D:
The company makes computerised,
precision engineered milled, lathed parts:
• Use CAD design software to draw the parts
• Decide on machine to use, set up and program
the tools (may need to buy or make new tools)
• Conduct one or several manufacturing trials
• All at own cost to secure a volume orders.
R&D uncertainties: designing a manufacturing process to achieve optimum cycle
time and price point, how to get the right tolerances/quality, which machine,
which tools, what sequence, what materials, how to minimise tool wear and tear.

10. Precision Engineering – the benefits:
Turnover: c£1 million
Employees: 15
Approximate claim values:
2011 2012 2013
R&D Costs £112,000 £107,000 £120,400
Tax Saved £21,400 £20,700 £16,700
Tax Credit £2,500 £7,400
Total Value £21,400 £23,200 £24,100
Three years benefit = £68,700

11. 2. Licenced Software – the R&D
Asset Selection, Portfolio Construction
and Fund Reporting software:
• Portfolio management shadow accounting
• Hedge funds exposures assessment
• API to link Excel spreadsheets to SQL database
• Manager assessment tools
• Algorithms to compute portfolio liquidity
R&D uncertainties: what standard formulas should be and how to compute them.
How to develop mathematical formulas and coding to deal with the complexity of
data input and range of scenarios.

12. Licenced Software – the benefits
Company in UK and Company in Swiss.
Turnover: UK c£600K / Employees: UK 5, Swiss 14+10
Approximate claim values:
2012 2013 2014
R&D Costs £213,000 £236,100 £211,000
Tax Saved £0 £6,400 £6,400
Tax Credit 27,800 £29,000 £33,600
Total Value £27,800 £35,400 £40,000
Their tax specialist in 2011
identified £45,500 in R&D
costs – did not work out
how to claim for costs in
Swiss company
Three years benefit = £103,200 (still our client)

13. 3. Ice Cream Maker – the R&D
Specialist in gelato and new flavours of ice
cream plus move to all natural flavours
• Blue-sky thinking to extend range
• Change recipes to only natural ingredients
• Add proteins to the recipes
• Prosecco range – new flavours
• Develop recipes capable of mass manufacture
R&D uncertainties: impact of new ingredients, achieving successful mix of
ingredients (test recipes small quantity), developing an industrial scale
manufacturing process for a new recipe.

14. Ice Cream Maker – the benefits
Turnover: c£9m / Employees: unknown
Approximate claim values:
2013 2014 2015
R&D Costs £203,750 £162,650 £162,200
Tax Saved £50,900 £48,300 £43,100
Tax Credit 0 0 0
Total Value £50,900 £48,300 £43,100
Four years tax saved = £181,000 (still our client)

15. How do you claim R&D tax credits/relief?
Claims are made as part of your
Annual Corporation Tax Return
You have two years from the end
of each accounting period to
claim your R&D tax credits/relief
?
You first need to recognise when you are doing R&D!

16. How do you claim R&D tax credits/relief?
You need to know:
• Your qualifying R&D projects
• How much your qualifying R&D
projects cost during the year
(costs include: staff salaries, sub-
contractors, consumables….).
Your R&D costs and project info. are
submitted with your tax return.
?

17. How do you claim R&D tax credits/relief?
HMRC require a written
‘Technical Justification’ covering:
• What advance you were seeking (in respect
of your most costly R&D project/s)
• Why it was considered to be an advance
(against the existing baseline)
• What the scientific or technological
uncertainties were
• What work was carried to resolve the
uncertainties.

18. Contact
I'd love to connect here’s my calendar link
https://calendly.com/linda-ez to make finding time easy!
Linda Eziquiel, Principal Consultant, RandDTax
Mobile: 0771 9439 229
Email: lindaeizquiel@randdtax.co.uk
Twitter: @LindaEziquiel
LinkedIn: www.linkedin.com/in/lindaeziquiel/
Help videos: http://bit.ly/Linda-Eziquiel-youtube
RandDtax website: www.randdtax.co.uk