Research carried out by CA tax revealed that while around 800,000 companies are expected to be eligible for R&D Tax relief, only 8% are actually claiming it. This is mainly due to the fact that most of these companies may not even have a need for the reduction. In fact, there are two categories of tax benefits under which you can claim for your business. While one is for loss mitigation and another for increasing productivity and efficiency in the workplace, you should make an effort to get the right kind of help if you want to avail of any of them. You can contact your local government office for assistance or find a skilled professional who can guide you about your options.
LOSS MITIGATION:
This is claimed by most large companies as they can get tax relief by claiming tax credits for the reduction in the cost of assets that they have. They can claim depreciation benefits on new buildings that they buy, machinery, vehicles, and new inventory. If you are interested in this option, you must ensure that you do not have to incur any kind of additional expenses for preparing your claim. You will have to prepare all the necessary documents, keep proper records and ensure that all expenses are properly documented. Do not try to claim too much in case you are going to claim for multiple items.
INCREASING PRODUCTIVITY & EFFICIENCY:
Another major benefit that you can get if you want to use loss mitigation in your business is by claiming tax credits for increased productivity and efficiency. To achieve this, you should identify the areas in which you can most effectively make use of human resources. For example, if you work with a team, then you can ensure that they are working in synchronization. When you set up a team atmosphere within your organization, it helps increase the overall productivity and efficiency of your employees.
It is important to understand that there are many other ways that you can use tax relief in the absence of the innovation step. One way is to use R&D financing. The process of R&D financing involves developing new products or services that are related to the services that you have to provide. However, you should be able to prove that you are designing these products or services in an efficient manner. In other words, you must be able to show that you are planning and developing new products or services to help your client in an efficient manner.
WHAT ARE THE ADVANTAGES TO ASSOCIATED WITH CLAIMING TAX RELIEF?
Another advantage associated with claiming tax relief for this process is that you can claim credits for increasing the quality of your products or services. When you set up new facilities or expand your existing ones, you have to meet the cost of new infrastructure. You can also claim credits when you invest in new tools for increasing your business and when you set up new machinery for improving the production rate of your goods and services. You can claim tax credits under both categories - in enhancing the quality of your product and for investing in innovative technology.
The process of claiming tax relief for this expenditure is straightforward. Once you have determined the tax amount, you can claim the tax credit for this expenditure. However, there are few things that you should keep in mind while claiming tax relief on this account. If you are using the facility of losing a job or getting laid off, then you will not be able to claim tax relief on this expenditure. However, if you want to claim tax credits for improving the quality of your goods and services and if you are still employed, then you can claim the expenditure.
There are two important documents that you should submit while claiming tax relief on this account. The first document is the application form for loss-making status, and the second is the proposed financial statement showing the income, assets, liabilities, and other qualifying costs in respect of the period of loss-making status. There are various rules and regulations that are applicable in connection with the submission of these documents. It is advisable to take professional assistance from a CPA if you are unable to understand the complex documentation.
CONCLUSION:
It is also essential to submit the documents within a stipulated time period. For example, if you want to claim tax relief for increasing your shareholding in a company, then it is essential that you must submit the relevant documents within three years of the loss-making status of your business. If you want to claim tax relief for increasing your qualifying expenditure, then you have to submit the documents within the prescribed period.
