R&D Tax Credits – A new podcast for Founders of Clever Companies!

Audio transcript:
Hi, my name’s Steve Livingston, and welcome to this podcast on R&D Tax Credits. Something a bit different in terms of how we can really share the information and help more companies access this very generous UK government tax relief.

First and foremost to introduce myself, my name is Steve Livingston, I’m the founder of a tax advisory firm called IP Tax Solutions. I’m a chartered accountant, and I’ve been advising companies for fast approaching 15 to 20 years, so fairly experienced in this area, and especially how we do tax reliefs. I have been a qualified Chartered Accountant since 2000.

So, I’ve worked with a lot of companies across a diverse range of sectors, and I think that’s one important thing to note from outset here, this research and development tax relief applies to pretty much any company in any sector. And so you may well find that you’re a founder or a director of a company, and you may have heard of this relief, but you may not be quite sure how it could apply to you.

This podcast aims to run through a series of questions about how it really works in practice; how it may apply to you and really answer frequently asked questions. That’s the format we’re going to take here so you can maybe pick and choose which ones you want to listen to. You can listen to them all if you like. Fill your boots! But you don’t have to do that at all, it’s really a case of giving you an awareness, and I should say in terms of legal blurb this isn’t professional advice, this really is just a case of education, and hopefully some entertainment on the way, as you can learn more about how this tax relief could benefit you.

So, without further ado let’s jump into the episodes. We’re going to try and cover a question in each podcast episode. We’ll aim to be quite short and snappy, so that you don’t have to get too bogged down in detail. But if you’ve got any questions you can of course shoot them over to me. You can find me at iptaxsolutions.co.uk. I also have a site at businessn2K.com. Or you can find me over an email, which you’ll find via those websites.

Again, let’s dive in. As I say, my name’s Steve Livingston. The people who are going to benefit from this podcast are really founders, directors of primarily SME companies, or they may be in charge of a large company, but hopefully find these of use. That’s all for now, speak to you soon.

FGB004 – Jonathan Lea on legal issues to consider in closing a funding round

Fast Growth Businesss

Jonathan Lea of the Jonathan Lea Network joins me this week to discuss legal issues to consider when seeking to close an early stage funding round. Legal issues to consider when closing a fundraising round In this podcast we cover: What documents most investors will typically expect startup founders to have in place – from … Read moreFGB004 – Jonathan Lea on legal issues to consider in closing a funding round

SEIS / EIS | Crowdfunding | Funding: Modwenna Rees-Mogg

Get Funded! podcast covering SEIS and EIS

Bonus Edition: Here is a re-run of a conversation we had on a related podcast (Fast Growth Business) which we thought listeners of the Get Funded! podcast would also benefit from as it includes discussion around SEIS / EIS. SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme) are tax advantaged funding options aimed … Read moreSEIS / EIS | Crowdfunding | Funding: Modwenna Rees-Mogg

FGB003: Richard Harrison, Inovaris talks SME grants | Horizon2020 | Business Growth Service demise

In this third edition of the Fast Growth Business podcast, Richard Harrison, Director of innovation consultants, Inovaris, provides founders and entrepreneurs with some tips on navigating the world of grants and also gives us his thoughts on recent cut-backs to business support services such as the Business Growth Service. Before we dive into the interview, our … Read moreFGB003: Richard Harrison, Inovaris talks SME grants | Horizon2020 | Business Growth Service demise

FGB002: Modwenna Rees-Mogg talks raising funding |Crowdfunding | CrowdRating

We are delighted to bring you this second episode of the Fast Growth Business podcast, this week we are pleased to welcome as our guest, Modwenna Rees-Mogg, founder of leading private investor news service, Angel News, amongst other entrepreneurial ventures including a new venture aimed at entrepreneurs called CrowdRating. This podcast is brought to you by … Read moreFGB002: Modwenna Rees-Mogg talks raising funding |Crowdfunding | CrowdRating

FGB001 – Richard Mills, CEO of Sleepcogni – Kickstarter

Fast Growth Businesss

We are pleased to welcome Richard Mills, CEO and Founder of new UK startup Sleepcogni to the first episode of the Fast Growth Business podcast. Before we dive into this insightful interview on launching a product business via Kickstarter, we should introduce the aims and objectives of the Fast Growth Business podcast. Fast Growth Business … Read moreFGB001 – Richard Mills, CEO of Sleepcogni – Kickstarter

GF012: SEIS / EIS advance assurance tax tips for Film Production companies

In this edition of the Get Funded! podcast we cover some additional tips for film production companies that may be seeking advance assurance from HM Revenue & Customs that they are a qualifying company for the purposes of raising funding under SEIS / EIS. Further info to enclose for SEIS or EIS film company HMRC … Read moreGF012: SEIS / EIS advance assurance tax tips for Film Production companies

GF011 – What is SEIS / EIS HMRC advance assurance and how do I get it?

Get Funded! podcast covering SEIS and EIS

In this episode of the Get Funded! podcast we cover the all important: HMRC SEIS / EIS advance assurance procedure This podcast includes the following points with practical advice: Why the advance assurance application is important? How you apply for it? Typical lead times? What could go wrong? Critical info to include? As discussed in … Read moreGF011 – What is SEIS / EIS HMRC advance assurance and how do I get it?

GF010 – What trades qualify for SEIS / EIS + potential problems for software (saas) companies!

Get Funded! podcast covering SEIS and EIS

In this episode of the Get Funded! podcast we cover the types of trades that qualify for funding under the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS).

We discuss the HMRC excluded activities list that you need to check to confirm that your proposed trade is not listed i.e. excluded. If not, then you should be okay.

There is a relaxation for these excluded activities to be included within your trade although it must not amount to a ‘substantial’ proportion of your overall trade. ‘Substantial’ for these purposes is deemed to amount to no more than 20%. The HMRC advance assurance procedure would be key in these circumstances.

We pay particular attention to the potential problem for software companies (particularly software-as-a-service (Saas) based companies) given that the receipt of royalties or licence fee income IS an excluded activity. There is a carve-out from this exclusion for companies that create the whole or greater part of the underlying asset that generates the licence or royalty fee income –  most software companies rely on this exemption to qualify for SEIS / EIS – but there are some further traps for the unwary….

GF009 – What does trading mean for SEIS and is my trade new?

Get Funded! podcast covering SEIS and EIS

In this edition of the Get Funded! podcast we cover the thorny subjects of:

  • what “trading” means for the purposes of SEIS and
  • how this interplays with the definition of “Seed” in order to be eligible for Seed Enterprise Investment Relief?

We covered in a previous edition (subscribe via iTunes if you’ve not already!) the fact that you need to be undertaking a qualifying trade within your company if you wish to raise funding under SEIS / EIS but when is this deemed to start and why is it important?

We need to ascertain the starting point for any trade as this has important ramifications for eligibility under SEIS and it also plays into when form SEIS1 can be applied for and / or the timing of the use of the monies raised.

Frustratingly there is no definition of trading aside from the general observation that it would involve undertaking activities with a view to a profit. But what does this mean in practice?

I have discussed this with HMRC Inspectors and they tend to apply the useful anology of a new shop: whilst the new fittings are being installed and the stock is on order you would expect the sign on the front to say ‘closed’ (it is not yet trading). Once the shop is ready and the sign is turned to ‘open’ then trading has commenced.

So the question for your business is whether you are in a position to accept paying customers? This can get a little hazy for software startups, for example, applying lean startup principles and beta launches etc…

For SEIS purposes, a company must be carrying out a new qualifying trade. For these purposes the trade must be less than two years old. So you must apply the above principles to determine when your trade started. If you are using a company that was incorporated more than two years ago and there has been activity in the company within this timeframe that might point to a trade then this could cause problems. You would be well advised to seek advance assurance from HMRC and to explain the position to ensure that there are no problems. Likewise, if you are acquiring the trade from a third party company then you would need to ensure that it satisfied the two year rule.

When seeking the tax certificates for the investors this can be carried out after 70% of the monies raised has been spent or four months after the trade commenced – whichever is earlier. Again the above principles come into play.