Yes, Lumo can support you with HMRC enquiries, even if we are not your R&D Tax Agent. Our team has extensive experience in handling enquiries, including Alternative Dispute Resolutions (ADR) and Tribunal hearings. However, the best way to prepare for potential compliance checks is to plan your R&D projects with professional guidance and ensure strong, real-time documentation of evidence. Lumo can help you establish robust processes and an effective audit trail to substantiate your claim and reduce the risk of issues arising during compliance reviews.
R&D Tax Relief is a government-backed incentive that allows businesses to reclaim a portion of the money invested in innovation. This can result in a cash payment or a reduction in Corporation Tax. The relief supports businesses across various sectors, helping them enhance products and processes. To qualify, companies must be liable for UK Corporation Tax and have engaged in eligible R&D activities.
Using a specialist means that you should have peace of mind that the R&D tax claim will be dealt with by experienced R&D tax advisors who have either invented products themselves or have supported others in their R&D development journey. It gives you –
When you work with Lumo all the above apply, along with other benefits, such as –
Businesses thrive when they use a specialist to perform tasks that are not part of their normal everyday operation, letting you concentrate on your business, your team and your customers.
Yes! It really is worth your time, at Lumo we find that many business owners have a lot on their plate and looking into something else feels like a burden. However, time is a small price to pay if your company is eligible to claim R&D tax credits.
There is a time cost but submitting an R&D tax claim isn’t something you can rattle off in a few minutes. You will need to at least: –
If you have little or no knowledge of the tax system, then this could take you a few weeks to gather and additional time in your business. Your accountant may be able to support you with some of the financial data.
But if you are busy, this may be a stretch to complete.
But don’t worry, Lumo are here to help. Follow the ‘The Lumo Way’ and we can support you through the whole process so you can get on with running your business.
There is a chance that HMRC might want to look deeper into your R&D tax claim. The best way to deal with this is to submit clear and accurate information, along with the appropriate evidence. You can ensure this by working with a professional firm who has years of experience with research and development tax.
If you are investigated, then you should stay calm and check back through your submission to HMRC. If there are any mistakes on there, then own up and rectify with HMRC.
If you are sure of the claim, then stand your ground. Explain in a firm but polite way what you have done and let HMRC work through it with you. Many might back down in this situation under pressure from HMRC but there is no need to if you are in the right. You don’t have to think that you are on your own with this. Lumo are here to help, so if you are faced with an investigation get in touch with our expert team and we will help you understand and process what the next steps are.
Many people think that having a grant for a business means they automatically do not qualify for R&D tax credits. However, that just isn’t the case. It does make the process of making a claim more complicated but doesn’t stop claiming altogether.
There are often grants available, particularly for innovative businesses, to help build and create new jobs. These are offered by government agencies and are seen as a great way to stimulate growth. And that is what R&D tax relief was set up for too. Getting your hands on cash to grow the business can come in many different forms. The distinct difference between a grant and R&D tax credits is that you receive the cash from a grant up front, and for R&D tax relief after a project and the tax submission have been filed with HMRC.
If you understand the difference between the two then you can plan ahead and ensure you make the most of these incentives.
Work with Lumo – we understand the system inside out and can help you build your business in the most effective way.
You will already have an accountant. And you will trust the advice they give. And we don’t want to undermine that. We find that accountants fall into one of three categories when it comes to R&D tax credits –
If your accountant falls into one of the last two categories, then we want to speak to you – and we want to speak to your accountant too!
We have an in-depth knowledge of R&D tax credits and how the system works. This means we leave no stone unturned when we are looking at your business and submitting a claim to HMRC on your behalf.
HMRC are continually changing their definitions and criteria relating to research and development. This means a lot of work for your accountant to stay in touch with the latest developments. In certain industries such as software these changes happen often. This can make the difference between a successful claim and one that is rejected by HMRC. The last thing you want is to put in a lot of hard work only to find that your claim is rejected. We pride ourselves in knowing the latest changes in regulations and making sure we support our clients with their R&D tax relief claims.
Yes, of course we can. If you are happy with your current accountant, then there is no reason to change. We understand what it means to have people in your business that you can trust. Your accountant will have all of the financial data we need to be able to submit a robust R&D claim. We are used to working hand in hand with accountants to submit R&D tax claims.
The best R&D tax claims are the product of many people working together. We find that someone from the production or operations team provides the best insights into the R&D challenges faced and how they were overcome.
The leadership team help us to understand the overall scope of the project and what it was designed to deliver. And someone from the financial side of the business helps us get all the facts together for the costing side of the claim. This is often your accountant.
At Lumo, we work with people to achieve the best outcome for you. This means we will liaise with your accountant and understand your business better. The more knowledge and information we can gather about your business, the better your claim will be.
Yes! A failed project doesn’t mean that you are excluded from this government incentive. The very nature of a research and development project is that you don’t know the outcome from the start of the project. If the solution was readily obvious or available to buy off the shelf, then you wouldn’t need to conduct research for your business. So, if you come to the end of a project and find that it just doesn’t work, you have still taken that commercial risk, still conducted R&D and are still eligible for this tax relief.
Many projects fail, this is the nature of business. You set out on a path not knowing what uncertainties lie ahead and what the final outcome might be. There are many products out there that are nothing like the original intention. There are many more failed projects that never saw the light of day. If you have a project like this, then you can still make a claim for the work, time and effort put into this. Don’t let that claim pass you by because you thought it wasn’t eligible.
It is a common misconception that failed R&D projects don’t qualify for R&D tax relief. This couldn’t be further from the truth. If you are unsure how to record the details of a failed project and how to present it to HMRC, then please feel free to get in touch. We have vast experience with this and will help you present it in the right way.
There are many areas of expenditure that can relate to a qualifying R&D tax claim. It is vitally important to ensure all relevant expenditures are included, just as it is important to leave out all areas that cannot be used. These are as follows –
Staff costs. The people in your business are more often than not the largest expense. The time they spend on research and development projects will often be the largest part of an R&D tax relief claim. If you don’t have a specific R&D department in your business, then you will have to apportion costs accordingly. This can be done by looking at how much of your business is involved in research and development and dividing this by the overall staff cost.
Associated staffing costs. There is more to employing staff then paying their salary. You should also include employer’s National Insurance contributions and pension contributions. These are often missed with an R&D tax claim, so get these costs down and see your claim maximised.
Contractors. If your project needs outside expertise that you don’t already have in your business, then you might have to buy that in from the outside. Contractors that carry out specific work on your R&D project should be included as part of a claim.
Materials. If you are putting together a new product, then there will be materials involved with this. This is the materials for the prototypes, failed tests and samples used to get your product from idea to reality and ready for the market.
Getting all of the relevant costs together for a claim means you make the most of it and don’t lose out. Being efficient in business is often about doing the right things first time.
No, absolutely not. There has been a lot of bad press relating to tax avoidance schemes over the last few years – and quite rightly so! These are schemes that were set up to help people and businesses avoid paying their fair share of tax. These tax avoidance schemes were playing within the rules but didn’t have a great deal of respect for the spirit of the UK tax system. HMRC has been working hard to close down as many of these tax loopholes as possible. They have been tasked with collecting more tax to help the economy and part of this remit was to look at tax avoidance schemes.
R&D tax relief is a legitimate way for UK business to claim money back directly from HMRC in relation to the research and development activities they have carried out. It is part of government policy and is administered by the HMRC themselves. All of the forms you complete will be submitted to HMRC. As such, this is a totally legitimate way to make your business as tax efficient as possible. None of us like to pay tax, particularly where there are genuine ways of making the tax your business pays as efficient as possible.
We would not be involved in a shady scheme that detracts from the good standing we have built up over a number of years. If you have any questions about R&D tax credits them look them up on the government website or speak to one of our professional team.
Great question! There is a lot of information here about what R&D tax relief is, but if you want to cut to the chase and submit a claim then you are in the right place. You have two main options when submitting an R&D tax claim –
If you deal with us, we will find out about your business and complete all of the relevant forms on your behalf. This allows you to get on with running your business without having to learn all the intricacies of the tax system.
If you feel confident in submitting your own R&D tax claim, then well done you! The next step is to complete the full Company Tx Return form, known as the CT600. This form is where you submit all of the figures that relate to your R&D project over the year. You will need to support this with a summary that explains your project in simple language, in terms of –
If you have any questions about R&D tax claims then get in touch with us.
This is another common misconception with R&D tax credits. People think that if the business makes a loss, then there is no Corporation Tax bill – and subsequently no benefit to claiming R&D tax relief.
However, HMRC view loss making companies differently for the purpose of R&D tax relief. They don’t apply the same rules as they would for those that make a profit –
For more detail on exactly what a surrendered loss is and how it might differ from other losses, please speak to our expert team. We have helped businesses benefit from R&D tax credits even when they have made a loss.
