Never has the saying ‘cash is king’ been more appropriate for business owners!
As UK businesses come to terms with the ‘new normal’ and look to the future, many are now having to adopt an agile approach to operational planning to accommodate the new business rules and regulations that have been thrust upon us as a result of the Covid-19 crisis. That’s before looking at the commercial aspects of their continued business operations.
For many businesses, cash flow and sustainability to endure these turbulent times is a worry. Adding to the stress is the quandary of how business owners should seek to secure immediate funds. Another consideration is that if these monies are repayable, is this going to place further burdens on the business once we gradually emerge from the Covid-19 pandemic.
Undoubtedly, there will be businesses that will thrive during these times. Others will survive by battening down the hatches, or perhaps by diversifying resources and adapting their business to meet new market demands. Sadly however, some business will not make the transition to post Covid-19 and a fundamental factor of this resilience will be the ability to financially support sustainability, implement any changes required to their business model, including products and processes, and subsequently be well positioned to harness any opportunities that will secure future growth for their business mid to long-term.
One option we would urge all advisers to touch upon with clients as part of the planning discussions is the possibility of making an R&D claim. In 2018 under 50,000 R&D claims were submitted in the UK. This number is a ‘drop in the ocean’ compared to the true number of businesses that would be entitled to claim had they spoken to a specialist R&D adviser. Many businesses unfortunately do not consider their business activity to involve research and development. R&D activity can be perceived as simply business as usual – developing a product or process that meets the demand of an ever evolving market, or more likely, simply a customer requirement to develop or enhance a product or process already in production in some guise.
HMRC have demonstrated their commitment to the R&D tax scheme by redeploying additional resources to the R&D team and pledging to turn 95% of all claims around in 28 days. This includes submissions for both SMEs and large companies. In addition, HMRC have launched a late submissions team who are directly responsible for ensuring any claims that have not been processed within the pledged turnaround are prioritised to ensure prompt payment. We are also seeing a number of businesses shortening their accounting period to source immediate funds via the R&D tax regime which is acceptable practice and worthy of consideration.
Identifying the full potential value of R&D activity across a business and undertaking a claim can be complex to navigate. However, at Markel Tax we successfully submit over 750 claims a year, made possible by a team of highly experienced in-house technical consultants, with science and technology backgrounds covering a large number of sectors. The team is vastly qualified holding PHD’s and degrees across a wide range of sectors including numerous staff with CTA, ATT, ACA and other accounting/tax qualifications.
If you have any further questions or concerns, please do not hesitate to either email Justine Dignam or call Markel Tax on 0333 920 5708.
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