This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our privacy policy for more information on the cookies we use and how to delete or block them.
  • Natural Resources and
    Research & Development

    Untapped tax payments?


Natural Resources and Research & Development - untapped tax payments?

21 November 2018

Are you missing out on a cash reward for your research and development activities?

Many companies in the Natural Resources sector will undertake activities that qualify for the UK’s R&D tax relief. Is your company involved in;

  • Modifying brownfield topsides and subsea facilities?
  • Improving modelling techniques to enhance resolution and confidence in the economic value of reservoirs?
  • Developing more efficient construction, installation, drilling, operational and maintenance techniques?
  • Undertaking new crude or catalyst trials to reform existing refinery processes?

If so read on:

Activities that use science and technology to create new, or make appreciable improvements to existing, processes, products or services often qualify as Research and Development activity. This R&D can be found at all stages of the project lifecycle from concept to decommissioning. Your company could be in a position to claim a tax payment up to 33% of qualifying R&D spend.

Two distinct schemes provide tax relief for research and development

The Small or Medium-sized Enterprise Scheme allows companies to claim a 230% tax deduction for qualifying spend. Loss making companies can surrender this deduction, resulting in a tax payment equal to up to 33% of the R&D qualifying expenditure.

The Research and Development Expenditure Credits (RDEC) applies to large companies where claimants currently benefit from a credit equal to 9.7% of the qualifying R&D expenditure. Loss making companies can apply for a cash payment.

Some key features of the schemes are worth considering, namely:

  • Loss-making companies can receive a real cash benefit
  • Profit-making companies will benefit from a reduction in their tax liability 
  • The IRF regime means that large upstream companies operating in the UK continental shelf can benefit up to 29.4% of the R&D expenditure
  • Activities do not need to be ground-breaking or cutting edge - design and engineering development activities may also qualify!
  • SMEs that have yet to trade are still eligible for R&D tax rebate if they make an election

It is also important to understand that a backdated claim can generally be made within two years of the end of the relevant accounting period.


How BDO can help you

We have a track-record of identifying potential opportunities for claiming R&D tax relief. We have supported over 500 R&D claims. Whether you are a first-time claimant or already make claims, we will support you in making sure you are claiming all available R&D tax relief. Get rid of that nagging feeling that your company may be missing a trick.

For more information or to discuss your R&D projects, please contact our Head of R&D tax, Paul Wong on [email protected] or Tax partner, Katherine Brown on [email protected].