Did you know you can claim money on your innovative projects in science and technology?
The UK R&D tax credit scheme is a government incentive designed to stimulate scientific and technological advances through tax reliefs. Startups claim on average £53,876 and, in London, this rises to £81,000.
The 20 year old scheme is vital to the UK Government’s economic recovery plan following the COVID-19 pandemic. A £375m fund has been launched for fast-growing businesses, and a target to increase total investment in R&D to 2.4% of UK GDP by 2027 has been set.
Though the scheme continues to reward innovation, the claim process itself has made little technological progress. We’ve identified four ways that using technology can strengthen R&D tax credit claims.
Become more self sufficient
The R&D claims process has historically centered around advisors using traditional methods, such as interviews, to document the information required for making a claim. This arduous process is often used to justify a high cost service.
Today, a chief finance officer wouldn’t dream of closing their books without a combination of a skilled finance team and a modern finance platform, so it’s surprising how little supporting technology has so far been introduced into the R&D claiming process.
Transitioning to a technology platform enables businesses to take control of their R&D claim without overreliance on third-parties. Technology can enable self-sufficiency and improve the overall experience by providing transparency and education throughout the process, while also reducing the cost of making a claim. Businesses should aim to spend less each year on claiming, not more. Cognism, who worked with us, were easily able to coordinate their claim with their global workforce using the EmpowerRD platform. Switching from a traditional advisor to a technological platform resulted in over £24,000 and 52 hours of time saved.
Benchmark against aggregated and peer data to maximise your claim
Collecting your R&D tax credit cash is always significant for startups and growing businesses, but it’s difficult to know if your claim has reached its full potential.
A technology platform can help determine whether your claim was the right size by providing additional information through systematically aggregating and comparing data across companies. Specialist advisors then review the information, draft your claim and gauge it against the line item level and in aggregate to compare to relevant peers. Even the most experienced traditional claim advisors can’t offer this benefit. A specialist R&D platform can access aggregated and anonymised data from users to benchmark a business against other companies, ensuring claims reach their full potential and the businesses receive the payout they are due. For example, at EmpowerRD we retrospectively evaluated Bloom&Wild’s claim and increased the credit they received from HMRC by 290%.
Involve your innovators in the claims process
In an effort to reduce fraudulent claims, HMRC is introducing stricter compliance measures, which will result in companies being required to provide more in depth information to accurately demonstrate their R&D activities when claiming.
This means it’s even more essential that the staff integral to your R&D projects contribute to the supporting evidence of your claim to make the strongest possible case. The traditional claim process would involve interviewing the tech team, which is no small task, especially as your company continues to grow and your projects become more elaborate. Technology removes the need for strenuous effort to collect information while also enabling collaborative working to help optimise your claim with the necessary detail required to thwart HMRC inspection.
Our client Birdie switched from their previous provider as the business and their investment in R&D grew, and their projects became more complex. The right technology allowed their team of 10 engineers to work collectively on the claim, and build out the details in a more time-efficient way.
Collect your data on an ongoing basis
Another advantage of using a platform is that it facilitates businesses in building their claims throughout the year. Birdie collects evidence on an ongoing basis whilst the engineering team works through project specifics, in order to provide a more in depth claim.
Technology enhances the overall claiming process for companies as they continue to grow. The platform offers transparency and enables the use of data to ensure your claim is benchmarked and optimised each year. It also cuts down the time and effort required to compile a claim by allowing your team to work simultaneously on providing supporting evidence as well as considerably lowering the fee.
EmpowerRD provides expert knowledge and guidance to growing businesses making R&D tax credit claims. We want to help you get the most out of your claim, for a fraction of the cost of traditional providers. By combining a team of expert advisors with an industry-leading platform, EmpowerRD makes the claiming process more reliable, time-efficient and cost-effective for innovative businesses.
Speak to one of our experts to find out more about our hybrid offering to maximise your claim.
If you’re entirely new to the R&D tax credit scheme, read our full ‘Introduction to R&D Tax Credits’ guide.