Much needed tax advice and consultancy can produce staggering tax savings for small businesses. Not only that it gives business owners the awareness, certainty, and peace of mind that they are accessing all the available reliefs.

Here’s how we recently saved a client £90K in patent and R&D Tax Reliefs.

The tax problem

The client was profit-making up to the year ending 31st July 2021. As of 31st May 2021, they had £712,245 net profit for this period and were due to pay £135k+ in corporation tax.

The client started making sales in respect of cosmetic dentistry from 15th May 2021.

They own a patent for cosmetic dentistry which was granted for the UK in May 2021. It is a divisional patent so it will further evolve and develop over time. They have an exclusive licence to this patent. The acquisition/licence costs were c.£25,000. They had applied for a patent in Europe, Australia, and America.

The client also undertook Research and Development (R&D) in respect of prototyping the product which they had previously made a claim for with HMRC. The client anticipated expenditure of £70k plus salaries this year.

The client wanted to consider if there were tax reliefs available to reduce profits made in respect of the patents and whether there was a potential claim in the current accounting period for R&D.

The advice

We recommended that a tax specialist is engaged to undertake the following work:

• Undertake an initial review of the company R&D activities and the intellectual property held by the company to establish the ability to make R&D and patent box claims and the likely values for the accounting periods ending 31st July 2021;
  
  
• Preparation of the claim calculations and report suitable to submit to HMRC in the relevant accounting periods; and,
  
  
• Make recommendations for claiming the tax relief in the future such as recordkeeping, to facilitate an easier claim process in the future.

The benefits

The benefits for the client were significant:

• Savings of £90K in patent and R&D tax relief combined!
  
  
• Certainty on the interaction between R&D and Patent claims, whether the company met the conditions to allow the claims, the period(s) in which claims could be made, and the full financial benefit.
  
  
• Awareness of any future potential R&D and patent claims, and the financial benefit of doing so.
  
  
• Peace of mind due to the concern about the amount of tax due to be paid and the uncertainty, as to whether any reliefs would be relevant.

Need help with a tax issue?

If you’ve been sitting on a tax issue or a complex situation for some time, we can help you access the expert advice you need. Get in touch with us or book a call with Donald and we'll get you the tax advice you need.