, , ,

SIC codes come under scrutiny by HMRC

The UK Standard Industrial Classification of economic activities, abbreviated as UK SIC, is a five-digit classification that you normally select upon registering your company.

It has been well publicised that HMRC is targeting non-compliance within the Research and Development tax credits regime and is placing a company’s SIC code under greater scrutiny.

A more reactive element of HM Revenue and Customs strategy lies within its approach to the enquiries being raised. They have published a list of sectors that are actively being targeted as they are deemed to be unlikely to undertake genuine Research and Development activities.

These are:

  • Care Homes
  • Childcare Providers
  • Personal Trainers
  • Wholesalers and Retailers
  • Pubs
  • Restaurants

We are also aware that unofficially certain other sectors are also subject to scrutiny and we believe these to include:

  • Estate Agents
  • Textile Industries
  • Construction Sector
  • Educational Institutions
  • Consultancy Firms

Part of this strategy is for R&D tax credit claimants to require more robust procedures both before submitting a claim and as part of the actual claim itself.

We actively work with our clients who undertake Research and Development activities to ensure that these obligations are fully met.

HMRC uses the SIC code as shown on public record at Companies House to identify whether a company falls into one of the sectors above. We are aware that companies initially select this code upon incorporation based upon the business plan for company at that time. The activities of a company will naturally change over the course of its life and thus over time the SIC code may not best represent the current activities of a company.

The SIC code should be periodically reviewed to ensure the most appropriate code has been selected and we would recommend that this review is part of any planning for a Research and Development claim.

If you are unsure of your SIC code and wish to discuss these issues, please do not hesitate to contact our team.

 

 

 

 

 

 

 

 

/by
, ,

R&D Tax credits…a reminder!

R&D Tax Credits update for entrepreneurs in 2023

Murray Patt, founder of accountants Alexander Knight & Co says changes made by HMRC to the popular ‘R&D Tax Credits’ scheme are a reminder to check if your own business qualifies.

R&D Tax Credits are designed to encourage UK companies to invest in ‘research and development’. Correctly administered they can reduce your tax bill or you can claim payable cash credits as a proportion of your R&D expenditure.

Since the scheme was launched, our team has claimed back thousands of pounds for clients. The successful claims we’ve made on their behalf range from £5,000 to hundreds of thousands of pounds.

In my experience, too many businesses across the UK are missing out on this valuable tax break worth hundreds of millions of pounds.

Shifting criteria

The R&D scheme is part of the Government’s drive to boost innovation. It means that businesses investing in the research and development of new products and processes get a tax deduction on qualifying expenditure, including staff wages, materials, overheads, software and utility bills, as well as the ability to claim cash back from HMRC.

The scheme is under continuous review and significant changes were recently introduced – and there are more changes to come.

The rules and qualifying criteria for the scheme can be complex for inexperienced claimants in terms of identifying what kind of business expenditure actually qualifies. This is particularly true in cases where clients employ or subcontract work overseas.

For example, the Government soon intends to implement a new change whereby only R&D activity being performed in the UK (subject to specific exemptions) will qualify. This will come into effect from 1 April 2024.

A new digital application process became mandatory this summer where project and expenditure details need to be supplied in a specific format as well as a variety of other administrative changes.

The government have helpfully extended the scope of what costs can be claimed as qualifying R&D expenditure and this includes artificial intelligence (AI) an area in which more of our clients are investing and exploring the possibilities.

Do it properly… and professionally!

The key to making a successful claim is to correctly identify what expenditure qualifies, when it was spent and record it accurately for HMRC in the newly updated prescribed manner.

The process can be complex which is why we have a specialist R&D tax credits team managing the claims to a successful conclusion on behalf of our clients. You can read more on the official guidance issued by the Government here.

If you want to understand more about how your business can claim ‘R&D tax credits’ email Murray Patt (murray@alexanderknightaccountants.co.uk) or call me on 0161 980 8788.  

/by
,

EVENT: R&D tax credits seminar

In the first of a number of events we are hosting in 2018 we are sharing a platform with Hale-based solicitors Blackstone.

R&D tax credits is the subject under discussion and we’ll be sharing our experience with a range of business owners about how to make a successful claim and how valuable it can be.

We will be updating you with details of exactly when this will happen – and if you are on our mailing list, you’ll receive an invitation soon.

/by