Knowledgebank: Accounting

Accounting R&D Tax Relief, Research and Development

When it comes to accounting R&D tax relief in relation to research and development activities, many companies do not know what is required of them. They are not sure whether they should state all their previous accounts in order to qualify for R&D tax relief or not.
The answer is simple. You do not have to state your previous accounts prior to making a claim with R&D tax relief.

Your current tax relief claim will be incorporated with your previous year’s accounts. You should however note that accounting treatment is given differently depending on the status of your company. Larger companies claiming for research and development expenditure credit get different accounting treatment from SME’s.

Understanding Accounting R&D Tax Relief in Research and Development

You are not obligated to state your previous accounts but you can do so if you want. In many circumstances, most companies do not do so unless there is a non-compliance with the companies act.
Usually a corporation tax in your accounts is a provision. This does not require you to start all over again and re-state your accounts.
Once you submit your claim, we will align all your claims to fall on your accounting timelines. From this, you can get the benefit of a tax liability and another advantage of securing a cash flow to help you get along.

The treatment of R&D tax relief in your accounting system however depends on Research and development expenditure credit and SME R&D tax relief scheme.

Research and development expenditure credit

When you receive relief and make a claim through the research and development expenditure credit, then that is an income. This income is taxable and classified as profit before tax. For the purposes of accounting, RDEC gross credit is portrayed as above-the-line on the income statement. In other circumstances, it comes up as “other income”. Though this accounting treatment is an obligation, you can discuss what appropriate measures to take with any of our R&D experts or with your company accountants and auditors.


Accounting for research and development in many industries especially the SME’s is uncompromised. The tax reliefs do not attract any taxes and therefore cannot affect the tax charges. Any R&D tax relief income for SME’s shows as the profit-and-loss-account and appears below the line in your income statement.

Why contact us?

The area of accounting and tax credits is hard to understand for many companies but we have a team of specialists and experts that will guide you all through.
For both RDEC and SME, we will give you expert advice that will help you optimise your R&D tax relief and ensure that all your companies’ costs and activities get proper identification for qualification.

Fill out a claim form today and ask any questions you would like answers to.
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