What is R&D?
Research & Development (R&D) tax relief is awarded to businesses that invest in innovation, usually in the form of developing new systems, processes, products, materials, devices, or any changes to the way a business works.
Despite being available in the UK since 2000, it is still largely under-claimed. The latest statistics released from HMRC in October 2019 show that despite the abundance of innovation being carried out by businesses, only around 52,000 R&D claims were made in 2016-17. This is around 0.9% of the total number of SME businesses in the UK.
The UK government is also looking to increase R&D expenditure as a % of GDP over the next decade from 1.7% in 2016 to 2.4% in 2027, so there is an awful lot of focus on ensuring companies are continuing to invest in, and be given the appropriate reliefs for developing new innovations within their sector.
Why is this relevant for the debt collection industry?
One of the most common reasons for not claiming is lack of awareness – many businesses are unaware that they are eligible for R&D tax relief. HMRC was careful to define R&D in such a way it could apply to varied work across multiple industries – the idea was to turbocharge innovation across every sector.
Many would assume that there isn’t a huge amount of research and development happening within the debt collection industry, but this is simply not true. The industry uses significant amounts of bespoke technology to ensure their business remains competitive and compliant.
Catax are experts in specialist forms of tax relief and have been helping businesses claim back R&D since 2014. To date, we have helped clients claim back over a quarter of a billion in cash benefits.
We recently worked with an agency based in Glasgow and helped them receive over £240,000 in client tax benefit for projects undertaken since 2016.
This particular company had designed and developed a new CRM system designed to integrate each client with each debtor to facilitate the overall process flow. The development of this system ensured that the correct solution per each customer and debtor is achieved in an efficient, compliant and affordable manner.
The company’s qualifying activity in relation to this endeavour represents an attempt to ‘achieve an appreciable improvement to an existing product through technological changes’ which is in accordance with HMRC’s guidelines around what is eligible for R&D tax relief.
How Catax can help
One of the biggest challenges that we face as a business on a daily basis is companies believing that the work they carry out does not represent ‘research and development’, so they do not believe they are eligible to make a claim. In fact, R&D can be claimed for any business which is developing new systems, processes, products, materials, devices, or making any changes to the way the business works.
The average claims that Catax see for this particular form of tax relief is in excess of £59,000, so absolutely worth finding out if your business could make a claim. We operate on a contingency basis so if there is no claim it will cost you nothing.
We have a dedicated R&D team who work on claims all day every day – there is very little we haven’t seen before! This makes them best placed to deal with your claim and ensure the best possible results.
Speak to us today to find out if you could make a claim.