Small business owners need to look at all the alternative sources of funding for their business. Some of the most effective methods of raising capital is through grants from government agencies to promote growth and stimulate job creation.
If you know where to look, then there are ample opportunities to explore in this area. But one thing we have found is that gaining a grant at the start of the process can have an impact on another source of funding at the end of the process. And that is the valuable R&D tax credit system. For those that don’t know, R&D tax credits is a tax relief set up by the UK government to promote investment by SME’s in their own business. It is something that the most forward-thinking businesses have tapped into to significant effect.
In many cases, small businesses need access to funding to get off the ground. Banks aren’t as easy to secure lending from as they were in the past. This means the average small business owner needs to think differently to gain the cash that turns a fantastic idea into a fantastic business. Time and money are the factors that don’t seem easy to generate. We can’t create more time, but the money ide of things has a number of solutions out there.
There is a common misconception that grants and R&D tax credits are mutually exclusive – that you can’t have one if you have already accessed the other. This simply isn’t the case. If you understand the processes involved, then there is opportunity to gain vital funding at the start of a project through a grant and still have an eligible R&D tax claim at the end of the tax year. The way to make this happen is to know the rules and regulations of the government tax relief to ensure that you are making a valid claim. Reading HMRC website might not sound like the most interesting use of your time but it can be a lucrative way to support your business and can also ensure you don’t waste your time putting in a claim for R&D tax that is rejected by the tax man.
What does it all mean?
Essentially, there are rules relating to unfair competition while we are still members of the EU. If grant funding is seen as state aid, then it precludes you from accessing the SME R&D tax credits, you can still claim under the RDEC method. This can be a fine line, but don’t worry if you don’t understand this fully. We are on hand to walk you through the process as an experienced guide.
And if you can make it work then it is the perfect combination to drive your SME forward. So, it works like this:
-Come up with the idea
-Receive grant funding for the project
-Go through the research and development phase
-Complete the project Apply for R&D tax credits
-Receive tax credits
– Repeat
The most innovative companies will make R&D tax credits as much a part of their business as research and development itself. This means they receive regular cash injections to the company to continually move forward. In the business world we operate in, standing still means you are being overtaken and potentially left behind. None of us want this to happen.
R&D tax credits should be an integral part of your SME we speak to hundreds of business owners just like you every year and the vast majority have a claim sat in the business ready to be submitted to HMRC. And the process can happen really quickly once we make a start. The money could be returned by HMRC in as little as 6 to 8 weeks. Imagine what you can do with this cash – it could make a significant difference to your operation.
If you need a trusted adviser to talk you through the process, then don’t hesitate to get in touch. We help people to understand what grants and R&D tax credits can do to their business, rather than simply submitting a claim on your behalf. We can work with your existing accountant to gather all the details needed. Small business needs all the financial help it can get. The fact that this is a government incentive that is available to many companies and is currently underclaimed makes this the ideal opportunity to secure vital funding at the perfect time.
