6 Misconceptions About Qualifying For R&D Tax Credits Claims

Around 90% of UK Ltd companies that are eligible for R&D Tax Credits are not making a claim. After speaking with many companies, that have since become our clients, we fully understand that there are misconceptions surrounding these tax credits. Over 70% of companies we spoke to had thought they did not qualify – they all became clients because they did!

In these difficult times please do not miss out on this valuable source of cash, it’s only repayment for a percentage of your time, effort and money you have spent on progressing your business.

1. There is a minimum amount of spend to be eligible

This is not the case. Fortunately, there is no minimum, or even a maximum amount a company has to invest into projects in order to make a claim. The reason behind this particular misconception may be historical as prior to 2012 businesses had to spend a minimum of £10,000 on R&D projects to be able to claim. This rule was abolished specifically to benefit smaller companies with limited budgets but big dreams.

2. Your R&D project must be a success

This thinking is not correct, in order to make an R&D claim you must have worked on a project that qualifies, ZLX can help you identify these if required. The Criteria for a claim is based around activities carried out, and not always upon their success. What really matters is the fact that R&D work had cost you time, energy and money. Failed projects actually demonstrate difficulty, which is the very nature of Researching and Developing ideas, products, systems and processes for the future success of your business.

3. R&D tax credits are only for profit-making companies

This thought deters a lot of SMEs from making a claim and securing any cash back. If a business has a trading loss it can use the R&D tax relief in exchange for a tax credit of up to 14.5% of the total amount. Making a claim can sometimes be slightly more complicated for non-profitable companies, however, you should not let this put you off, a claim can still be of high value. Future profits often come after much blood sweat and tears and R&D is almost always a part of this business progression process. This is also an incredibly valuable source of income for companies that are still in their early stages of growth.

4. R&D is only for certain industries

One of the greatest benefits of the R&D Tax Credit scheme is that almost every industry can make a claim, not just the obvious few. ZLX have successfully claimed for Luxury Spa’s and Racing Cars for Live Events and Making Tents, Care and Nursing Homes and Delivery Drones, Selling Cars and a chain of Bars, Constructing Homes and Cutting Stones, Big Pharma or small Farmer and Software to Child Care, plus many more that didn’t rhyme. We hope this shows that almost all industry types can make successful claims, at the last count we had enjoyed working for over 40 different industries.

5. The claiming process is far too difficult

It’s not at all difficult with ZLX’s help. Once we steer you, then together highlight and understand what of your activities, effort and expenditures can be classed as R&D, the claiming process becomes an easy process for you. You are experts at what you do, and we are experts in R&D claims. A qualifying Innovation Report requires much technical knowledge to maximise the claim. We produce around 90% of the work required and on average our clients spend less than a day in total on it. (A good few hours work when it returns on average £77k). We don’t stop there and offer free of charge onward consultancy regarding your R&D activities.

6. R&D Tax Credits are not really effective

Finally, do not let anyone fool you into believing R&D tax credits are not effective. Making a claim could return a significant amount of cash to your business. For some businesses this is a lifeline. You can spend you tax refund on anything – hiring new staff, buying new equipment or paying out dividends.

HMRC’s average benefit for SMEs claiming for R&D is £64,562. The ZLX average is considerably higher, currently sitting at £77,000. What would your business do with an extra £77,000? Or how about £154,000? (dependant on your year-end we can claim for the past two years). Well worth getting in touch to check.

Hopefully this has cancelled out any misgivings that you may have had around your company being able to make a claim. 

ZLX have consultants throughout the UK, they have in many cases held high positions within companies, if not owned them. In-house we have top technical engineers and financial experts, together this enables us to better understand your very unique and special business.

There are NO charges for our services and we ONLY get our fee paid through success and 100% of our clients have been paid out.


Check if you are eligible today with our quick pre-consultation questionnaire and challenge us with your claim.

Get in touch with us today to find out more about how ZLX can help you.