Are you currently raising capital? Here’s how the R&D Tax Incentive could make your life easier.

James Campbell

Whether you a first-time entrepreneur or a seasoned veteran, capital raising is one of the most difficult parts of starting and running your own business. It is estimated that over 90% of start-ups fail and one of the main factors that leads to this, is the inability to raise the funding required to continue to finance the business.

There are many different avenues that exist for entrepreneurs to raise funding for their business, including:

• Family and friends
• Angel investors
• Networking groups
• Platforms
• High Net Worth’s
• Fund Managers and Venture Capitalists

These individuals and/or groups of investors not only provide the business with the capital required to continue to scale, but will also often bring expertise, knowledge, operational experience and assist with opening doors and introducing other networks into the business. The process of raising funds from these individuals and/or groups though, can often be time consuming and will take the Founder away from the day-to-day operations of their business, meaning a significant opportunity cost exists from time that is allocated towards raising capital.

One avenue of funding that is often overlooked or not clearly understood is the Research and Development (R&D) Tax Credit Incentive. As a start-up and scale-up, R&D is one of the most essential parts of your business and is what leads to business growth, advances systems and technology and drives the scalability of your company. The main purpose of the UK’s scheme is to reduce the cost of R&D, by offering tax offsets for eligible expenditure.

Does my business qualify?

Work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science – like economics – or a theoretical field – such as pure maths. The project must relate to your company’s trade – either an existing one, or one that you intend to start up based on the results of the R&D.

To get R&D relief you need to explain how a project:

• looked for an advance in science and technology
• had to overcome uncertainty
• tried to overcome this uncertainty
• could not be easily worked out by a professional in the field

How Can I Access This Funding?

Start-ups and scale-ups may be eligible to claim part of their Research and Development spend under HMRC’s R&D Tax Credit Incentive. These companies may be able to claim up to 33% of qualifying expenditure under this scheme. Specialist R&D Tax Consultants exist in order to provide guidance and assistance to these companies, who may be new to the scheme or may not be optimising the amount that they may be entitled to claim back. These companies will either charge a company a fixed fee in order to do the consulting work for a business or charge a success fee on the money that is returned once the claim has been approved by the Government.

Walmer Group is one such specialist consultancy that exists to help sustainable businesses in maximising their claim from HMRC and works purely off a success fee from grant money that has been approved and returned under the scheme. There are many advantages that exist for Founders and Entrepreneurs under this model, but the main one is that it frees up resources and time that can otherwise be spent in scaling and raising additional finance for their business’ growth.

Please get in touch for a complementary consultation on what your company might be eligible for on

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