You’ve heard the famous saying ‘R&D, as easy as 1, 2, 3…’, haven’t you? Probably not, and there’s a reason why.
While there’s ample opportunity for businesses to invest in research and development within the food and drink sector, it’s estimated that a mere 1% of claims from this industry have actually been paid out.
This means drinks businesses either aren’t aware they can claim or don’t know how to.
The fact that you’re reading this article would suggest that you’ve tackled the first hurdle. The next step is the more difficult one: working out how you go about claiming.
Jargon aside, this involves telling HMRC about the work your business has done to improve or refine your drinks range (AKA research and development activity) in line with government criteria. This can include a whole host of things - from extending the shelf life of your latest soft drink to tapping into a new audience by producing gluten-free beer.
To get this right, you need to speak plainly - detailing your project and its outcomes clearly and precisely. This should be topped off with supporting documents that outline your costing schedule.
If that sounds a little daunting, you’re in luck. At Lumo, our team does the hard work for you. To help you find out what this would look like if you worked with us, we’ve created a quick and easy 5-step guide to a successful R&D tax credit application.
The first step’s pretty simple. After getting in touch with us via phone, email or our on-site contact form, and engaging in some classic small-talk about the weather, we’ll get started on our fact-finding mission.
Here, you’ll just need to answer a few basic questions about you and your drinks business while we walk you through how the process works. This is the point where you tell us, for example, about how you aimed to rebrand and make your soft drink flavours sugar-free, or increase the alcohol content in your luxurious craft beers using specially modified machinery.
After going through these short questions, we’ll be able to tell you right away if it looks like you’d be eligible to make a claim. If, at this stage, we don’t think this would be the case, we’ll let you know at the end of the call - saving you from any wasted time.
Once we’ve confirmed you’ve got grounds to make an R&D tax credit claim, it’s up to you where we go from there. Obviously, we hope this is the case, and we’ll make ourselves available to you to answer any and all questions you might have before taking things further.
After giving us the go-ahead, we’ll ask you to send over all the relevant accounting information - from the cost of having your staff work overtime on your new gin flavours to how much you spent on testing out new whisky filtration technology. This information will then be passed over to our in-house tax experts who’ll analyse your data and confirm your ability to claim.
With your eligibility confirmed, you’ll be put in touch with a dedicated consultant who’ll give you a follow-up call - this time to go into more detail about you, your drinks business and your qualifying project. This will help us to establish exactly what you should be entitled to, and boost your chances of claiming tax relief.
As part of this call, we’ll give you a better idea of a timeline for completion, as well as digging into the amount of relief you could expect to receive on your R&D activity.
Next, we’ll write up your report. This will take the shape of a technical report highlighting your business’s qualifying research and development activity, as well as a costing schedule covering staffing costs, machinery costs, subcontracting fees and more.
Once we’ve sent you a draft and you’ve queried any potential concerns, we’ll give it a final once-over before submitting the finished article to HMRC.
Then begins the waiting game…
HMRC will spend a few weeks reviewing the report and all of the attachments. Once you have the all-clear, they’ll usually release the funds usually within four - eight weeks of processing your claim, which we’ll then transfer straight into your account!
With minimal effort needed on your part, our experienced consultants will make sure your claim is reported on and submitted the right way the first time around. This way, you can enjoy a speedy, satisfying turnaround from start to finish.