Corporate Tax (R&D Tax)

Introduction to Corporate Tax (R&D Tax)

In order to encourage Investment in Research and Development (R&D) the government of India has provided motivation in the form of various tax incentives. The incentives are basically available in respect of revenue and capital expenditures which are incurred by the entities in carrying out R&D activities related to their businesses also including contributions to various institutions or organizations for carrying out scientific research.

Research and development (R&D) tax credits are valuable government relief that rewards the UK Companies for investing in innovations. Corporation Tax (R&D) will help the company to claim tax relief only if such company is liable to Corporation Tax

R&D Tax Relief Scheme: The benefit of claiming relief is available only to companies which are registered under Small or medium sized enterprise scheme or the large company scheme.

Eligibility for claiming Relief

• The company claiming the relief should understand that R&D projects seeks to achievean advance in overall knowledge or capability in the field of science or technology.
• The project must be related to the company’s existing business or if it is a startup which will be based on the results of R&D.
• If the company is claiming tax relief under SME scheme it must own any intellectual property that might arise from the project.

R&D Cost that qualify for relief

If the company and project meets the necessary conditions that it is eligible to claim tax relief on revenue expenditure .i.e. day to day business expenditures excluding capital expenditures on assets such as

• Employees directly involved in carrying out R&D, excluding consultants, agency workers, or directors with a contract of employment.
• Staff providers to whom the company pays and who are actively engaged in R&D activities.
• Material, whether consumable or transformable, used in carrying out R&D activities.
• Clinical trial costs.
• Utilities such as power, water, and fuel used in R&D, excluding telecommunication and data costs.
• Computer software.
• Sub-contracted R&D expenditure.

How and When to Claim R&D Relief

When to Claim:

The company can claim R&D Tax relief in your CT Return or amended return. The time limit for this claim is 2 years after the end of the relevant CT accounting period.

How to Claim:

The company shall claim for R&D tax relief by placing an X in either box 99 (SME) or box 100 (large companies) of your CT return. In both cases, place the enhanced expenditure in box 101 – that is, the actual amount spent multiplied by 230% or 130% as appropriate. This enhanced figure should also be included in your calculations of the profit (box 3) or loss (box 122) for the period.

If your company is an SME and you want to convert some or all of the tax relief into payable tax credits, you’ll need to put the amount payable to the company in box 87, box 89, and box 143, and place an X in the ‘repayment due for this return period.

Record Keeping Requirements:

There is no specific record-keeping requirement for R&D tax relief claims. However, the general requirement of CT to keep sufficient records to support the entries on your CT return still applies.

Key Strengths

• We have a dedicated R&D team with extensive experience in providing services to clients engaged in diverse industries and sectors.
• Our team of professionals provides advice on matters relating to tax and regulatory implications and processing of potential R&D tax benefits.

Key Services Provided by Us

• Assess liability for claiming R&D incentives.
• Assist in implementing systems and processes for capturing the necessary information related to R&D incentives.
• Assistance in preparing and processing application forms relevant for recognition and approval of R&D facility.
• Identify the expenditure eligible for R&D incentive claims.
• Preparation, review, and facilitation of R&D tax incentive claims.
• Support services for realization of R&D incentive claims.