The UK government introduced the R&D tax relief in 2000 and has increased the relief to encourage R&D spending aiming for the country to be a leader in a competitive global market. This is a vital area for the government looking to retain companies in the UK with Brexit on the horizon.
Awareness in financial services amongst advisors and companies remains low especially with SME’s. Despite this money reclaimed is substantial with the UK government handing out £2.4bn in 2015.
Latarche added “The latest technologies including Big Data, AI, Cyber security and Blockchain has seen huge investment by insurers,syndicates, reinsurers and brokers in recent years and will all very likely qualify. As would developments in predictive analysis, actuarial, regulatory and pricing. At Moore Stephens we have assisted a number of clients to claim back large amounts of their implementation costs for RuleBook our market leading pricing and distribution tool.
Moore Stephens has a substantial team which is meticulous in helping clients build the narrative to secure the credit and undertake many second opinion reviews which reveal gaps in submissions. As a global advisor Moore Stephens also utilise their global network to provide advice with one point of contact. Advice on identifying projects that qualify for early application is also beneficial for clients. The benefits also extend to improvement in company ebitda and provide substantial funds for reinvestment and for quoted companies the relief can be taken ‘above the line’ with R&D investment generally welcomed by shareholders. In the UK companies can go back two years/accounting periods and claim between 11% and 33% of the investment.
As insurers and brokers there are restrictions on VAT that can be claimed back if the company are supplying products and services to clients within the EU.
However, the issues arise around claims and the expenses that are paid out in order to handle the claims on behalf of the policyholders.
Latarche said “If you have incurred a claim the VAT that is paid on some of the expenses incurred when dealing with the claim where the insured is outside of the EU, can potentially be recouped. All too often the costs, including the VAT, are simply placed into the claims systems rather then transferred to a VAT account where they can be identified and the action taken to claim them.
“There are issues around the claims for those policyholders who are within the EU but you can make a claim if the policyholder belongs outside of the European Union and when working with our clients we have been able to identify some large amounts that have gone unclaimed when rightfully the client could claim the VAT back.”
Mr Latarche said the issue for the market is to understand what can and cannot be claimed and to ensure that any VAT incurred is correctly coded and recorded to make identification easier.
“If you can code the EU and non-EU claims separately then it would be far easier to identify those expenses that could be subject to the reclamation of VAT,” explained Mr Latarche.
Brexit may also see a new dynamic. “We will have to see what the rules are post the UK’s departure from the EU,” he added. “It may well add a new dimension to the situation and while the rules are complex it is money that is due to brokers and insurers under the rules.”
However, Mr Latarche stressed that the efforts were not looking to bend the taxation rules. “This is not an aggressive process,” he said. “This is simply a case of highlighting the items where VAT can rightfully be claimed. We are not trying to be aggressive as that has the potential to create more problems than it solves.”
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