If you are a subcontractor, you may think that what you do is not eligible for research and development (R&D) tax credits but that might not actually be the case.
What is it that you do?
If you are a subcontractor it’s easy to think that your client will be the only one eligible for R&D tax credits as they are the party who are creating the overall product or the one that is innovating, however, subcontractors can play a key role and be eligible in their own right.
If you simply follow the plans and specifications from your client to produce the product that they require then you will probably not be eligible for R&D tax credits. However, if you are given the specification of what is required but not how to make the product then you could be eligible.
If you create an item that is improved or requires any development to meet different criteria, then you are actually conducting research and development and could be eligible for R&D tax credits. Although you are creating something to meet someone’s requirements, you are still doing the research to develop the product.
For example, you may have been producing the same part for many years for a client but then they decide to alter their product that the part goes into and they need you to make it lighter, smaller or a different shape but still perform at the same level. You are given the requirements of the parts but not how to create it and you will need to develop the part to the new specification. This is classed as eligible R&D as you will be conducting research to develop the part to the new specification.
Understanding R&D definitions
Many people don’t realise what they are doing is R&D. The term R&D can often lead to misconceptions as many people can wrongly assume that it refers to R&D in a traditional sense and believe it only applies to lab-based activities when actually the R&D tax credit definition is much wider and also applies to more technologically focused businesses where developments can be a more fast pace.
The true essence of what makes your product eligible for R&D tax credits is that you need to be trying to achieve something that is classed as being technically challenging or innovative in your industry. You must be able to demonstrate that you have made an advancement in science or technology which others haven’t done and that it benefits more than just your own company.
What type of businesses are eligible?
There are no restrictions on the type of businesses that are eligible as long as your business meets the R&D tax credit definition of R&D and that your business pays Corporation Tax. Your business can be any size from a micro business through a large international corporation.
There are many types of businesses that make claims such as manufacturers, engineering, pharmaceuticals, IT industry, energy industry, food and drink sector. However, this is not an exhaustive list and many other types of businesses are eligible.
How do you know if you are eligible?
The guidelines for R&D tax credits are not 100% clear and creating a successful application can require skill and knowledge. At TEQ Group we are highly skilled and experienced in helping businesses to determine whether they are eligible for R&D tax credits and making successful applications.
But we aren’t just R&D tax credit experts we are also technical specialists who are able to understand your business and advise you of your eligibility. We are so confident of our abilities to create a successful claim that there are no upfront costs and we only take our fee when your claim has been paid. We can make the claim process hassle-free as we can manage the whole process for you.
So there really is nothing to lose in contacting us for a free, no-obligation assessment. To find out more contact TEQ Group today on 01423 815299 or click the button below and we’ll be happy to offer some advice.
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