Illustration of Research and Development Tax Credit Statistics 2020

WhisperClaims’ take on the Research and Development Tax Credit Statistics 2020

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It’s that time again—the Research and Development Tax Credit Statistics have been published, and my inner stats nerd is in full flow!

First of all, the standard points—use of the scheme continues to increase, with 17% more claims submitted in 2017-18 compared to 2016-17 and the amount of support given increasing to over £5.1bn, a 15% year-on-year increase. This is great news for UK companies, with more and more companies accessing support for their R&D activities—15,750 companies claimed for the first time in 2017-18, indicating that awareness of the scheme continues to grow every year.

However, none of that is really news—the trends have been stable for several years now, and the first page of HMRC’s report gives a great summary of these points. What I’m more interested in is using stats to attempt to form a more nuanced picture of the types of companies that are making claims.

We get a lot of questions from our users about how to identify eligible companies amongst their clients, and the easiest thing to do is paint them a picture of the most likely candidates. So, if I twist statistics a little to do my bidding, I could take the modal values from this year’s stats to describe the most common claimants. This means that I could tell our clients to look out for manufacturing companies in London that were formed less than five years ago, making claims of less that £5k tax benefit—that’s the most likely SME claimant according to the stats. However, this information doesn’t line up with my experience of making claims, and is probably not entirely helpful to any of our clients!

Right, how else can we do this? Well, rather than taking the mode, we could look at the median to get an idea of what an ’everyman’ claimant looks like. Under the SME scheme, our everyman claimant is a company of 15-20 years standing, operating in Arts, Entertainment and Recreation, based in Yorkshire and the Humber and making claims of £20-25k in tax benefit. They’re really quite different to our RDEC everyman, who are still based in Yorkshire and the Humber and 15-20 years old, but these companies work in Electricity, Gas, Steam and Air Conditioning and make claims of £30-40k. Hmm, this still doesn’t sound particularly like any clients I’ve ever worked with!

So, what’s the point of this, other than an excuse to spend an afternoon juggling numbers and spreadsheets? Really, it’s that you can’t rely on statistics and basic facts to identify eligible clients—if you do you’ll miss a huge number of opportunities. What’s always missing from any analysis like this is the personal touch—advisors that know their clients well can learn to spot eligibility in the unlikeliest of places, even if that’s the 15 companies registered in the Channels Islands, or the five working in Public Administration, Defence & Social Services that that made claims for SME R&D tax relief in 2018/19.

And this is what we’re all about at WhisperClaims—enabling our clients to put their in-depth information about their clients to good use in making strong, robust R&D claims. This helps strengthen their relationships with their clients, as well as boosting their bottom line—a win/win!

As part of this, we’re expanding our range of eligibility related content to help you more easily and accurately identify R&D. Our other articles and the WhisperClaims ebook cover the bulk of written information, while our webinars directly invite you into the conversation, person-to-person.

For more examples, visit our website and subscribe to our mailing list to stay updated on any new events and resources we have to share with you.

How to write an R&D tax relief technical narrative

With HMRC’s new mandatory requirement for project descriptions on all submissions, we wanted to share our experiences to help others to write their best possible technical narratives.

Available to download here.

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