Unfamiliar and confusing terms can put people off making any form of tax relief claim. In fact, we believe that this is one of the primary reasons 90% of business owners are not claiming the R&D tax relief they are entitled to. Hopefully we can help simplify some common tax related terms with our A-Z series whilst educating you on what we do here at ZLX.
A is for appreciable improvement
In R&D, Appreciable Improvement isn’t simply a tweak or predictable upgrade, it must be something that a professional in the field would acknowledge as a considerable improvement.
B is for business solutions
Business solutions – it’s in our name. Why? Our team of consultants don’t just help to process R&D tax credit claims. We offer free business growth advice that enables growth and investment opportunities.
C is for capital allowances tax
Capital Allowances is the tax relief gained by the unknown or sometimes forgotten hidden expenditure in your commercial property. Typically, this includes elements such as heating, lighting, air conditioning, wiring, and security systems – essentially everything that would remain in the building if you tipped it upside down!
D is for direct contributions
Direct contributions refers to the things you do that are part of your investigation into solving the scientific or technological problem.
E if for eligibility
Did you know? 90% of companies that are eligible for tax credits are failing to make a claim!
F is for full-time equivalent
Full-time equivalent of R&D personnel is defined as the ratio of working hours actually spent on R&D during a specific reference period (usually a calendar year) divided by the total number of hours conventionally worked in the same period by an individual or by a group.
G is for going concern
This is an accountancy term used to describe a company that is not at any particular risk of liquidation in the short or medium term. The going concern requirement is important when applying for R&D Tax Credits. SME companies can only claim R&D Tax Credits if the company is a going concern when it made the claim. However, with coronavirus having a devastating impact on many businesses, HMRC is actively monitoring the impact of pandemic on the ability of companies to meet the going concern requirement.
H is for hybrid claim
‘Hybrid claim’ is used to describe a claim that is made under both the SME and RDEC schemes. For example; if a business was awarded a grant to fund a specific project, it may also be eligible to also claim R&D by making use of both schemes.
Keep and eye out for part two!