200% write-off under R&D relief vs. an individual interpretation
Case study
Tax
The introduction of a 200% deduction in the R&D relief, exclusively for wage costs, has caused businesses to react even more than expected – and justifiably so. Why?
Firstly, doubts have arisen as to whether 200% relief is also available to those entrepreneurs who capitalise salary costs as intangible assets in the form of development work. Although there has been a recent tax interpretation favourable to the entrepreneur, the way the Claimant has phrased the question does not give absolute certainty as to the understanding of the provisions in favour of entrepreneurs.
Therefore, an entrepreneur intending to benefit from the preference in this way should obtain his own individual interpretation that will fully protect him.
However, there appears to be a second issue – first of all, is it reasonable and financially efficient in your situation to capitalise these costs? Is it an obligation? Do the tax and balance sheet policies in this area need to be consistent? Can I take advantage of the 200% relief in complete security without individual interpretation?
The answers are obviously in your favour, and we have recently noticed changes in tax policy for many entrepreneurs, translating into significant improvements in liquidity (in these times of high inflation, ‘putting money aside’ has a very noticeable effect), as well as direct savings (200% vs 100% R&D relief).
We are pleased that the changes to the R&D relief regulations have prompted entrepreneurs to think about the proper arrangement of their tax policy in the context of their situation, which, after all, does not often change dynamically.
We carry out complex projects for the arrangement of tax strategy in the area of R&D activity – we invite you to contact us!
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