When dealing with matters of R&D Tax Credits, HM Revenue and Customs (HMRC) categorize companies into two sizes. These are the SME and Large. Usually, the SMEs are eligible for Tax Credits whereas the large corporations are not. Therefore, you must identify where you belong before handling your claim issues.
According to HMRC a big company is that with above 500 workers and has annual revenue of more than €100 million. Over and above, their balance sheet must be above €86 million. Therefore, any firm that lies below these criteria qualifies to be an SME. You must learn more on how to determine the size of your business and the steps to take if its scope varies with time.
Mostly, grants tend to impact on your business tax credits request. However, you ought to be well versed with the type of grant you are obtaining. Essentially, there is non-notified state support and the notified state. For grants that are state aid notified, you will not be eligible to appeal tax credits for projects financed by the grant through SME system. But you can submit your claim via the RDEC scheme.
Your claim for Non-notified state aid will depend by the manner in which the grant played a role in connection to the funding. In case the grant financed the entire project, then file your claim with the RDEC, but be informed it will refund 8% of your advance fees. Therefore, you are required to clarify if the received grant benefited the projects that you are claiming tariff credits for.
Note, the scheme will only accept claims for specific expenditures such as payroll, R&D expendables, wages for externally hired works. Claims related to contracted out costs are never considered in this scheme. Ideally, where the grant played no part towards the project R&D correlated expenditure, then it will not influence your tax credits appeal in any way. Though it may seem complicated if handled correctly, there is a possibility that your company will simultaneously benefit from the grant as well as the tax credit. Thus, providing you with extra funds to use in growing your venture. Learn more from us at https://granttree.co.uk/r-d-tax-credits-guide/
However, the knowledge of what to request for and what not to claim for is paramount. Many entrepreneurs desire to claim more to make the most of their bonus. They forget submitting an improper claim will raise an immediate alarm to the HMRC and result in scrutiny or delayed response. Thus, familiarize yourself on costs that qualify for R&D tax credits before making your submissions.
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