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Do R&D tax credits apply to an LLP?

by Anna Szymańska

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 subject 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, lawyers and former HMRC inspectors, ForrestBrown’s award-winning technical expertise ensures that our clients maximise the value of their R&D tax credit claims.

Simply get in touch and we will be able to help with your R&D tax credit claim — even if your circumstances are not straightforward or qualifying activity is difficult to identify.

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This article was last updated on 7 May 2019.

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