Accountants' Zone

Capital allowances are classed as a business right, not a privilege, and are not taken into account when property is valued for commercial or accounting purposes.  Upon selling, your claim for embedded capital allowances will in no way impact your capital gains tax liability, nor can you be taxed on a tax rebate.

In most instances, you may have claimed for “moveable” assets and everyday purchases such as curtains, carpets or electrical equipment. However, typical embedded allowance claims involve the services of a surveyor specialist to analyse the property, which often result in identification of items that have not previously been claimed and could offer significant tax rebates.

We expect claims to be processed within 4-6 weeks providing all supporting documentation is available.

When you make an R&D tax relief claim then it will most likely be reviewed by an HMRC R&D specialist unit. For first time claims it is standard practice for an Inspector to carry out the review. Depending on the quality and accuracy of the claim, the Inspector will take a decision on the level of reviews for subsequent claims. Any questions will be raised via an enquiry, usually done in writing to the company. We strongly advise that a claim for R&D tax relief is supported by a detailed report which outlines the technical advancement and uncertainties as well as providing a detailed breakdown of the eligible R&D costs.

You can claim relief on costs that have been expensed through the Profit & Loss account and in certain circumstances you can also claim capitalised expenditure (providing that the assets purchased have been classified as intangible assets). The main areas of costs that can be claimed are:
• staff costs
• agency workers
• subcontractors/freelancers
• software licence costs, and
• consumable items (heat, light and power, and materials and equipment used or transformed by the R&D process).

A Company can submit an R&D tax relief claim at any point up to the first anniversary of the filing due date of the company tax return for the accounting period in which the claim is made. This means that a business can make claim for R&D tax relief going back 2 accounting years.

Typical examples of software projects that may qualify are:
• provision for the integration of hardware and software platforms
• innovative methods of capturing, transmitting, manipulating, and protecting data;
• software to run new computer hardware;
• extensions to programming languages, database software or operating systems;
• tools to extend the functionality of application software programs or of an operating system;
• state-of-the-art software for new projects, or new functionality for existing R&D projects;
• original data management techniques, such as new object representations and new data structures;
• software to run on devices with pre-installed operating systems, such as handheld GPS, mobile phones and tablets;
• software development tools, such as tools to port data across platforms, tools for image processing or character recognition.

Common examples of product and process development projects that may qualify for R&D tax relief include:
• innovative product development using computer aided design tools;
• development of second generation or improved products;
• tooling and equipment fixture design and development;
• developing unique computer numerical control programs;
• designing innovative programmable logic controllers;
• designing innovative manufacturing equipment;
• prototyping and three-dimensional solid modelling;
• designing and developing cost-effective and innovative operational processes;
• integrating new materials to improve product performance and manufacturing processes;
• evaluating and determining the most efficient flow of material;
• designing and evaluating process alternatives;
• designing, constructing, and testing product prototypes;
• developing processes that would meet increasing regulatory requirements; or,
• streamlining manufacturing processes through automation.

We will first give you the opportunity to get to know us and understand our business model, ensuring that you trust our process and approach with your clients.  After this we will carry out an initial no-obligation review to assess the feasibility of a claim, as well as giving an estimate of the tax relief that we envisage and our associated fee and commercials.  Unless you wish to be more involved, we can work independently on each claim using your client records and our surveys.  Our standard service level agreement is always provided within our engagement letter.

We have worked with various accountancy firms, from individual practitioners up to large firms and are greatly experienced in supporting other accountancy practices in this manner. We like to work with accountants, not against them.

We deal frequently with embedded capital allowance and other, complex tax relief claims and have developed extensive experience and knowledge in this area, giving up the most up-to-date understanding of common pitfalls and areas of intricacy.  These instances involve tax evaluation exercises that are typically outside of the average accountant’s skill set, but with which we are fully conversant.

There are various firms that promote capital allowance claims services but, as with all professional advisers, the standard varies considerably.  We have an exemplary track record with both our clients and their accountants and can provide references accordingly.

Following our initial, no-obligation review, we will deliver an estimate of both the anticipated claim total and our associated fees and commercials.  Our fees are completely transparent and tailored to each project.  We work on a results-based fee on the value we deliver.  Importantly, this is not stacked upfront like with some other specialists in this area.  We take our fee at the point of tax relief, which could be spread over a number of years depending on how best it is delivered to client for tax efficiency.  Our fees are, of course, also tax-deductible.