Research & Development (R&D) tax relief was first introduced back in April 2000 and since then over 100,000 claims have been made with more than £9.5 billion of tax relief issued. In fact, R&D tax credits are unusual in that they provide the taxpayer with the opportunity of claiming more in relief than they actually paid in tax!
The financial services industry has seen significant improvement in R&D cost recovery through R&D tax credits in recent years. However, comparative to other sectors, financial sector firms have failed to take full advantage of what is one of the most generous tax credit schemes of its kind.
R&D tax credits are particularly relevant for the financial services sector where there is a need to keep pace with technological changes, and benefit from them, meaning many companies have been enhancing existing software platforms or invest in new technology in 2016. This is where the possibility of a claim under the R&D tax credit scheme comes in to play.
It is important to understand that it is not purely R&D research that can derive these substantial tax credits, in fact there are many examples of insurance companies successfully claiming millions for major IT projects that they were not aware gave rise to such claims. For example, R&D tax could be relevant for:
- developing complex theoretical models to be factored in the risk assessment or pricing;
- automating manual processes through software implementation;
- developing complex reporting functionalities to address customers’ requests;
- integrating clients solutions with their in-house software system;
- developing solutions for big data.
If the expenditure qualifies under the R&D tax credit regime the relief could be substantial, in some cases up to 25% back on R&D spend. Whilst it is undoubtedly a challenging area when it comes to identifying qualifying R&D activities, there have been many successful claims in respect of software projects. Accordingly, if your company is undertaking significant software related expenditure, don’t just assume that it will not qualify for R&D tax relief. Some careful analysis of the challenges presented by the project might just open the door for what could be a potentially significant tax saving.
How we can help
The firm's specialist team comprises engineers and software programmers as well as specialist finance professionals such as auditors and tax accountants all of whom are experienced in claiming R&D tax relief.
Since the scheme began in 2000 our team have successfully claimed back around £150m for our clients with a 100% success rate. In fact, even for those companies who have already made a claim, there is often more that can be claimed and we can provide a second opinion. To date, all our claims have been accepted by the HMRC as regards technological or scientific qualification.
To find out how much you are able to claim back before your year end please contact us