A tax incentive called the Research and Development Tax Credit is available for UK companies that engage in R&D. It's actually a really good incentive - in broad terms, every £1 an SME spends on R&D is treated as £1.50 for tax purposes (the rules are a bit less generous for large companies). For profitable businesses, this decreases taxable profit and therefore the corporation tax bill. Loss making businesses, who have no tax bill to reduce, can get cash back instead. That's important, because many of the heaviest investors in R&D are early-stage companies who have yet to make any sales.
Since the credit came in, companies have had six years to make the claim. I don't know why the rules were so generous; for most corporation tax purposes you only have two years from the end of the year to make and amend claims. Perhaps there was a feeling that companies or advisors wouldn't be well informed about the credit so needed plenty of time before the window closed. In any case, in a couple of months that's changing, and you'll have two years to make the claim. 31 March 2008 is the final day to make claims for the years 31 March 2002 to 31 March 2006. After that, you're stuck.
At Fizz we have plenty of experience of successfully making claims for the R&D tax credit, so if you think your business might qualify, give us a call.
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