Tax credits

They have been tweaking the pages on the web site for HM Revenue & Customs pages on Research and development tax credits.

 

You have to warm to an official web site that has a "Small print" section, but the most useful bit may be "Top 10 common errors".

 

For example, "Staff must be employed under a contract of employment with the company undertaking the R&D in order to qualify." Knowing how some small R&D based start ups operate, this must be a common pitfall.

 

As the note continues "In groups of companies, staff or directors sometimes have their contracts of employment with other companies even though they work for the R&D company. Because they are not employees of the R&D company, their costs do not qualify as staff expenditure, although they may qualify as payments to external staff providers."

 

It seems that you also have to be careful about accepting taxpayers' money in other ways. "If a notified State aid is received in respect of the R&D project, expenditure on that entire project cannot benefit from R&D tax reliefs and payable R&D tax credits for SMEs."

 

Quite what they mean by "notified State aid," with its capital letter, is unknown. From what follows it may be something to do with the EU. But doubtless the tax people themselves can advise. After all, from the evidence here they do see to be trying.