Regardless of what is happening with the markets worldwide, Covid-19 throughout 2020 has impacted companies of all sizes in many industries. Some companies continue to furlough staff, others are no longer making profits and others yet have ended up closing. That is not to say companies are not able to thrive given these difficult times, as long as they plan for the future and are able to adapt to our new normal.
While certain vaccines will be issued in the near future, we really do not know when companies, specifically SMEs, will be able to rebound or possibly even survive. Can we expect another lockdown after the holidays? If history tells us anything, the second wave pandemics hit harder than the first and we are seeing this throughout the world.
Scientific experts claim that we may start seeing some normalcy toward the end of 2021. In the interim, companies have and will continue to see revenues reduced and, as a result, dip into reserves to replace lost revenue.
In the interim, the British government and the Bank of England are providing further support to an economy facing a difficult winter. The government has extended some of its Covid-19 funding programmes through March of next year to assist companies.
With the UK economy facing ongoing uncertainties, it is in the best interest of companies to continue to invest into R&D and take advantage of R&D tax credit claims or other forms of government funding to maximise bottom line revenue for the future.
What about those companies that are unable to do so? While most companies have and / or will be taking advantage of all Covid-19 funding programmes, R&D tax credits is another revenue source to take advantage of. If you are a start up or one of those companies that is unable to invest in R&D activities now, have never claimed and / or did not claim earlier in the year, this is the ideal time to do so to increase cashflow.
While Covid-19 continues to disrupt our lives and the way that companies carry out business, it is more likely than not that many companies’ R&D claim benefits will be reduced due to staff being furloughed, thereby reducing R&D costs, which will affect the bottom line R&D tax benefits in subsequent year(s).
Companies countering this affect have reduced overhead costs by technical staff working remotely, which helps to keep the focus on revenues but allows companies to work on new projects. Many of our clients that are spending time and resources on innovation and R&D activities have had the foresight to meet new demands due to the pandemic, thereby continuing to succeed. To ensure your company is prosperous in the future, continued R&D activities is a not an option but a requirement.
The new PAYE that takes effect April 1, 2021 may also play a role in your company’s future (Good News for SMEs- HMRC’s New Draft Legislation for R&D Tax Credits). This is an area in which RDP Associates can advise you on how to maximise your claims now, and in the future.
Our take home message to companies is to plan for the future by investing in R&D activities. Claiming R&D tax credits has always been an important part of growing, even more so now. RDP has been assisting companies for 30 years in preparing R&D tax credit claims, as well as government grant funding, worldwide. For those top 50 accounting firms or R&D speciality firms that are asking you to confirm what is eligible, consider a new service provider, such as RDP, where we can easily advise you on what is eligible in one meeting.
To find out more about the RDP process, grant funding and complementary assessment of your R&D claim benefits, contact us here.