Surrendering losses for an R&D tax credit

While most UK businesses have become more aware of research and development (R&D) tax relief – and will be getting value from the schemes – the question now could be how and why to surrender the loss for a R&D tax credit.

When claiming R&D tax relief companies can use their qualifying R&D expenditure as a tax credit releasing a cash payment. To surrender losses in this way firms must be in a tax loss position according to the tax computation – the financial statements position can tell a different story.

Both the small and medium-sized enterprises and R&D expenditure credit (RDEC) schemes include tax credit options with the amount of cash released dependent on the particular R&D scheme used and the route chosen. With every organisation in its own unique situation the decision to surrender losses may not be cut and dried.

Surrendering losses...