Research and development Flashcards

1
Q

When does R&D take place

A

When a project seeks to achive an advance in science or technology through the resolution of scientific or technological uncertainty.

Does not have to be achived all resolved

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2
Q

Who qualifies

A

Small and medium size enterprises
Fewer than 500 employees
Annual turnove less 100 million euros
Annual balance sheet figure of less than 86 million euros

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3
Q

Usual effect

A

The company can claim 230% of the R&D expenditure when caculating adjusted profits for tax purposes

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4
Q

Capital

A

Does not qualify for enhanced R&D expenditure however is elgible for 100% FYA (even building for R&D)

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5
Q

Staff costs

A

All earning paid to employees and directors who are directly and actively involved in resolving the technological uncertainties of a project

All earning paid to employee and directors who are directly and activelu involved in indirect activities which are specifically identifiable as part of the project (Maintenance engineer or receuiter)

Salary, bonus, pension contribution and ER NI

Not benefit in kind

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6
Q

Software

A

Software that is employed directlu in carrying out R&D will qualify for the enhanced expenditure

Software that is employed directly in indirect activities of the R&D project also qualify for enhanced expenditure e.g payroll software
Not software to train HT department

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7
Q

Consumable or Transfromable

A

Revenue expenditure which is directly employed in R&D. Item that can be consumed or trasnferred.

LIght, heat, power

Production of G&S is does not qualify R&D has already occurred to get to this stage

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8
Q

Clinical trials

A

Qualify for enhanced relief

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9
Q

Subcontracted company
Connected

A

If connected then it is the lower of the actual amount spend or the cost to the third part

Remember the full cost still received 100% relief

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10
Q

Subcontracted company
Unconnected

A

If unconnected then it is 65% of the actual amount spend which qualifies for the enhanced expenditure.

If unconnected a joint election can be made for the ‘connected treatment’
Election must be made 2 years from the year end in which the contract was entered into

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11
Q

Externally provided worker

A

Following conditions must apply:
Must be an individual
Not a director or employee of the company
Be onliged to provide services personally
Be under the controll of the company

65% rule if unconnected (election can be made)

Lower of expenses or cost incurred by individual if connected

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12
Q

Explain if the company is loss making

A

If the company has made a loss, the loss can be surrendered for a tax credit

The loss surrendered is the lower of:

The unrelived loss
or 230% of the qaulifying R&D expenditure

The tax credit is calculated as

14.5% of the loss surrendered

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13
Q

When does the cap apply

A

Accounting periods starting after 1st April 2021

The cap = 20,000 + 3* relevant expenditure on workers

Relevant expenditure included

All PAYE and NI liabilites on all staff (not just R&D staff)
Also included that of externally provided workers and connected subcontractors

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14
Q

When does the cap no apply

A

The company is creating intellectual property
e.g patents copyright, design rights, trademarks

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