Frequently Asked Questions | Breakthrough Funding

Questions questions

What does Breakthrough Funding do?

In a nutshell we help small businesses become great big ones. Our aim is to make sure they get the cash they're due from government schemes with the minimum of fuss, as quickly as possible.  

We have four highly experienced Senior R&D Consultants each with a relevant Masters degree in a technical area (such as engineering), and over 20 years director level experience in large organisations. Our other eight staff are highly experienced in the processing of R&D tax credits and liaising with HMRC tax inspectors.

Between us we have submitted hundreds of R&D claims with a 100% success rate. It's all we do.

What are R&D tax credits?

Also called R&D Tax Relief, it's a government incentive scheme to encourage companies to carry out self-funded development projects. It’s the government’s way of trying to make the UK more competitive and innovative in world markets. It allows companies to claim for a proportion of the costs they’ve already incurred in developing new products, services or processes. We describe them as cash for innovation - it’s a much better description. You can download our "Definitive Guide to R&D Tax Credits" here if you want the detail. 

Is it a new thing?

Not really. The scheme started in 2000, and since then more and more small companies are realising they can claim. However, it’s thought that 90% of eligible companies are still not getting their cash. 

Is it a tax avoidance scheme?

Certainly not. The Department for Business, Innovation and Skills (DBIS), HMRC and The Treasury fully support the scheme and WANT COMPANIES TO CLAIM.

Why hasn’t my accountant claimed for me before?

There’s a belief that this scheme is for companies who employ staff in white coats peering down microscopes or trying to develop a cure for ebola. This is just not true. To be fair, the government hasn’t promoted the scheme as they might, so while your accountant may be vaguely aware of it, they probably don’t realise it applies to you. We work closely with accountants to produce claims and help them understand how the whole scheme works. If you would prefer them to do it, or you want to have a stab yourself download our "Definitive Guide to R&D Tax Relief" here, it tells you everything you need to know to make a claim. 

Who can claim?

We specialise in the small company scheme. This is generally for limited companies based in the UK with less than 500 employees but we can also help larger companies. Take the Babbage Test to see if you are eligible. 

Does it really result in cash back?

The quick answer is “yes”. If you meet the criteria and are making a profit we can get you a refund of corporation tax that you’ve already paid. If you’re making a loss we can get a cash payment paid into your business account. However, sometimes our clients prefer not to take the cash and take the tax benefit instead. That’s their decision. 

How much money can I expect to get back?

This is difficult to answer because it depends on your tax position. If the costs qualify you should expect between 11% and 33.35% of those costs back. Around two thirds of our clients get 25% back. 

How long does it take to get the money?

75% of claims are settled by HMRC within 28 working days of our report being submitted. However, if there’s a query or they have a backlog that’s built up, this can extend to three months. The fastest ever claim put forward by one of our consultants got paid within 5 days, but that was very unusual!

What do I have to do? Will it take a lot of my time?

You’ll be pleased to know this isn’t like applying for a grant or European funding where you have to fill in pages and pages of questions. We do as much of the work for you as possible, and in total it shouldn’t take more than a day of your time (or your staff’s time). We need three types of information:

  1. Some salary details and a breakdown of payments you have made to subcontractors or to pay for materials used in prototyping. Most of our clients send us a spreadsheet or a print-out from their accounts package.
  2. The names of all the PAYE staff involved in the project and a little bit about them.
  3. We need details of the innovation project either from you or from one of your technical guys. To do this we book a telephone call or pay you a visit. This usually takes an hour or two. We then write it up and you need to check to see if it’s a fair reflection of the work you’ve undertaken. Basically that’s the sum total of your commitment. 

What types of projects are eligible?

Any project that’s involved substantial innovation. It must be scientific and technical and not just an aesthetic enhancement. See our client stories to give you an idea. Alternatively just give us a ring. Our team is very experienced and can usually tell within five minutes if your project is likely to be eligible. 

My project failed. Does that matter?

No. The costs involved in the development activity you’ve undertaken are taken into consideration, not the outcome of the project itself. Success or failure doesn’t matter. 

Can I claim for website or app development?

It depends. If you’ve just designed a new website for your company and got it online, that’s not an innovation. However, if there’s whizzy back-end stuff on the site that does something a bit different, then that element of work can be claimed. The same applies to app development

Can I claim for fashion design, graphic design or new branding projects?

Not usually. If you’ve made something look different or developed a new brand, this doesn’t qualify for the scheme. But if you’ve used new materials in a way that hasn’t been done before this could.

Can I claim for market research and business case development?

Not usually. However, if it’s an integral part of getting a new product through to market it may be eligible, but we would need to understand the details. 

Can I claim for developing training packages?

The short answer is “no”. But if you’re attempting to deliver the training package in a new and different way, this element could be eligible. 

What costs can I claim back?

We will analyse all this for you, but essentially it’s salaries, prototype materials and subcontractor costs, but they must be directly related to the innovation project. Capital costs such as equipment, machinery etc cannot usually be claimed for this scheme but can be claimed in other ways. 

We are a charity. Can I get cash for innovation?

If you’re not eligible for corporation tax you can’t claim under this scheme. But many charities have trading companies where innovation work takes place and we can claim under that company. Ring us as it’s worth checking if your set-up means you’re eligible. 

We are an LLP. Can I get cash for innovation?

An LLP structure is normally exempt from this scheme. But some LLPs have a separate entity where innovation work takes place and we can claim under that company. Ring us as it’s worth checking if your set-up means you’re eligible. 

I haven’t made a profit. Can I still claim?

Yes, you can still get a cash payment if you’re making a loss, as long as you meet the other criteria. 

I’m a start-up business. Can I still claim?

We can only submit a claim once you‘ve completed one full financial year. This doesn’t mean you can’t apply later on - it just means you need to wait a bit. If you’ve finished one year and you meet all the other criteria then we can claim for you. 

Can I claim for server costs?

Not in our opinion, no. 

Can I claim for my utility bills?

Yes, you can claim a proportion in relation to the innovation costs. We can advise you. 

I have other grants and funding for my R&D. Can I still apply?

It depends. We need to look at the nature of the grants you’ve received and can advise you if you can still claim. If you’ve received a grant from the Technology Strategy Board (or Innovate UK as they are now known), then probably not. Best to ring us and we can work through the grant document and see.  

We pay dividends instead of a salary. Can I claim for those payments?

No, sorry, we can only claim back for PAYE staff salary costs not dividend payments. 

I have used subcontractors from overseas. Can I still claim those costs?

Usually yes, as long as you are eligible for UK corporation tax and they have sent you an invoice for their work. 

How far can I go back to claim?

You can go back two full financial years. That’s your company financial year, not the HMRC tax year. 

Can I get my accountant to claim for me?

Yes of course. Just make sure they have experience of submitting these claims and can write up the technical report that explains the innovation work in detail. This needs to be attached to the re-submitted/submitted corporation tax return.

Will my accountant charge me for filing the claim you’ve produced?

We value the R&D tax credit amount for your accountant and write the technical report for HMRC.  Your accountant then needs to resubmit/submit your corporation tax return using the figures we’ve given them. We’ve timed this process and it takes around 6 minutes, certainly no more than 15 minutes. They may decide to charge you for doing this, but the fee should be minimal. 

Will this process flag up my company with HMRC?

Some business owners worry that if they make a claim, somehow it will ‘flag up’ their company with HMRC, and they will then delve into every aspect of their company. In our experience this is simply not the case. 

What happens if HMRC want more information?

Sometimes an HMRC tax inspector has a query about an R&D claim we’ve submitted. Usually they want to understand the innovation in more detail or have a query about some of the costs we’ve outlined. This is perfectly normal and we handle all these discussions for you. Our team members are very experienced at submitting claims and dealing with HMRC. Not once have they had one of their claims rejected. 

How do you charge for your services?

We charge you a percentage of the valuation of your innovation costs (we call this the qualifying expenditure). We’ll never ask you to pay anything up front and our fee is only due when HMRC have agreed that you are indeed eligible for the cash payment or future tax benefit. On occasions (although it doesn’t happen very often) a client might decide not to take the cash but use the tax benefit in a future year instead. That’s their decision, but we’re afraid that if you don’t want the cash immediately and you want to use the tax benefit instead, our fee will still be due.  We will fully explain our fees to you before you decide whether you wish to go ahead and use our services.

What if I have a turnover of more than £85 million a year?

If your innovation projects qualify but you have a turnover of more than £85 million a year, we can still apply for a cash payment for you – it’s just not as generous as the small company scheme. You might expect a return of costs of about 8p in the £ as opposed to 25p in the £, so it could still be a substantial return and we’d be happy to help. 

What if I have more than 500 employees?

If your innovation projects qualify but you have more than 500 employees, we can still apply for a cash payment for you – it’s just not as generous as the small company scheme. You might expect a return of costs of about 8p in the £ as opposed to 25p in the £, so it could still be a substantial return and we’d be happy to help.