Research and development (R&D) tax credits can only be claimed by companies which are liable to UK Corporation Tax. Limited Liability Partnerships (LLPs) do not pay UK Corporation Tax and as a result they usually cannot claim R&D tax credits.
R&D tax credits are a form of Corporation Tax relief and so, as a limited liability partnership (LLP), you cannot usually claim as you are not registered for UK corporation tax.
Conditions for claiming as an SME:
- Company is a going concern.
- Company is within the charge to UK Corporation Tax.
- Company meets the SME thresholds for headcount and turnover or balance sheet assets.
- The company carries out a trade or future trade to which the R&D activities relate.
- The R&D activities claimed have not been contracted to the company.
- Expenditure is deductible for corporation tax purposes in the claim period.
- No grants or subsidies have been received in respect of the expenditure.
When LLPs can qualify for R&D tax credits
If your partnership has a corporate partner, that corporate partner will be subject to Corporation Tax on its share of profits from the partnership. You therefore may be able to benefit from R&D tax credits for R&D activities carried out by the partnership, in proportion to your partner profit-share.
With a team of chartered tax advisers, technical specialists and former HMRC inspectors, ForrestBrown’s award-winning technical expertise ensures that our clients maximize the value of their R&D tax credit claims…even when their circumstances are not straightforward or their qualifying activity is difficult to identify.