An SME with a qualifying project can claim a cash refund from HMRC by surrendering losses.
This means that company won’t be able to carry forward tax losses to be offset against future profits.
Key conditions for the a company:
Cash refund = 14.5% x surrenderable loss
Lower of R&D enhanced expenditure (230% x eligible R&D expenditure)
Unrelieved trading loss after including the extra R&D tax credits
Eligible R&D expenditure is £200,000.
Enhanced expenditure is £200,000 x 230% = £460,000.
Total unrelieved loss including R&D tax credits (£260,000) = £600,000
The lower figure is £460,000 and 14.5% is £67,000 cash refund.