RDEC, previously known as the Above the Line (ATL) tax credit, is an extension of the existing R&D tax relief scheme for large companies. From 1 April 2013, UK qualifying companies will be able to benefi t from cash incentives even when they are loss making.

The new scheme is designed to attract international investment on R&D innovation whilst offering clearer budgetary responsibility to the R&D department of large companies.

Qualifying companies will typically benefi t from a tax credit of 10% (before tax) of R&D expenditure. (A different rate applies to Oil and Gas companies.) This effectively offers companies a return on investment of 7.7% post tax from 1 April 2013. This post-tax return on investment will grow to 8.8% as of 1 April 2015 when the main CT rate falls to 20% and the tax credit increases to 11%.

RESEARCH AND DEVELOPMENT EXPENDITURE CREDIT (RDEC)

The tax incentive will enable the unlocking of trapped tax benefi ts if a company has historically been in a tax loss position. This is regardless of the current tax position.

WHO DOES IT AFFECT?Despite the additional benefi ts brought by the RDEC to many companies, it is still a fundamental question as to whether your company carries out qualifying R&D activities. This is the yardstick that needs to be applied consistently, should any company contemplate benefi ting from the R&D tax relief available.

There is no restriction or exclusion as to which industry can benefi t from the RDEC scheme, as long as the tax defi nition of R&D is met. Companies must also be subject to UK corporation tax self-assessment.

The regime may specifi cally benefi t: Large companies for R&D tax purposes; SMEs with projects only claimable under the Large Company scheme; Those who have not been able to benefi t from conventional R&D claims in the past due to their tax loss position; or Those who are considering global options for setting up R&D centers.

HOW CAN COMPANIES BENEFIT?The RDEC is currently optional and is set to replace the current Large Company scheme in 2016.

In order to benefi t from the regime, you need to: Undertake qualifying R&D activities Elect into the RDEC Prepare relevant documentation to support the claim Record the tax credit as a grant in the accounts Record the RDEC tax benefi t in the tax computation and return

The relief will continue to be administered through the corporation tax self-assessment regime as with the existing claim system.

To prevent abuse, the scheme will limit the amount of the tax credit receivable in the accounting period to the total amount of PAYE/NIC liabilities for employees who are directly involved in R&D activities and a proportion of the PAYE/NIC liabilities for group company who were engaged as externally provided workers on the company’s R&D activities.

Companies that have been claiming under the existing Large Company scheme should consider the impact of the RDEC on their future claims, e.g. accounts adjustment and timing of the claim. www.leyton.com/ukwww.leyton.com/uk

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A strong team comprised of scientifi c and technical experts

A complete end-to-end service tailored to your needs

Experience in a range of industry sectors

An active and continuous monitoring of legal, fi nancial and technical developments

Assistance in the event of an audit by HMRC

Our Added-Value

The regime may specifi cally benefi t: Large companies for R&D tax purposes; SMEs with projects only claimable under the Large Company scheme; Those who have not been able to benefi t from conventional R&D claims in the past due to their tax loss position; or Those who are considering global options for setting up R&D centers.

In order to benefi t from the regime, you need to: Undertake qualifying R&D activities Elect into the RDEC Prepare relevant documentation to support the claim Record the tax credit as a grant in the accounts Record the RDEC tax benefi t in the tax computation and return

Leyton is a leading consultancy dedicated to providing tailor-made cost optimisation solutions to its clients. In the UK, Leyton specialises in Research & Development (R&D) Tax Relief claims, R&D grant applications and HMRC R&D Audit support, as well as Patent Box and LLP Structures.

Based on solid experience and with the support of multidisciplinary tax, scientifi c and engineering teams, Leyton delivers professional servicesof the highest quality.

Horatio House – 77-85 Fulham Palace Road – London – W6 8JAPhone: +44 (0)207 043 2300 Further Information at www.leyton.com/uk Further Information at www.leyton.com/uk

About Leyton

HOW CAN LEYTON HELP?The RDEC regime becomes effective from 1 April 2013. Companies should start considering its impact by evaluating the potential benefi t against work that needs to be carried out.

To help you secure a successful claim, Leyton can help you: Identify qualifying activities and maximize your claim potential Lead and manage the claim preparation process by mirroring the expertise of your key technical and fi nancial personnel Prepare the necessary supporting documentation addressing all qualifying conditions and pre-empting HMRC challenges Liaise with your accountants to ensure the full benefi t is appropriately recorded in a timely fashion and Engage with HMRC should there be an enquiry about the claim

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To help you secure a successful claim, Leyton can help you: Identify qualifying activities and maximize your claim potential Lead and manage the claim preparation process by mirroring the expertise of your key technical and fi nancial personnelLead and manage the claim preparation process by mirroring the expertise of your key technical and fi nancial personnel Prepare the necessary supporting documentation addressing all qualifying conditions and pre-empting HMRC challengesPrepare the necessary supporting documentation addressing all qualifying conditions and pre-empting HMRC challenges Liaise with your accountants to ensure the full benefi t is appropriately recorded in a timely fashion andLiaise with your accountants to ensure the full benefi t is appropriately recorded in a timely fashion and Engage with HMRC should there be an enquiry about the claim

Please contact Leyton on 020 7043 2300 for further information.

OTHER THINGS WE DO... THE PATENT BOX

The Patent Box regime is an incentive aimed at attracting active R&D investment leading to the creation and active management of patentable intellectual property (IP). Qualifying companies benefi t from a 10% tax rate on relevant IP profi ts.

This is a supplementary tax incentive designed to provide further support to UK companies involved in R&D innovation. Our in-house team of highly experienced scientifi c, engineering and tax consultants work closely with each company to implement a claim process that is bespoke to their business model and appropriate to map the relationship between qualifying IP, income streams and relevant IP profi ts.

As there are no confl icts when companies claim the R&D tax relief, including the RDEC, as well as the Patent Box benefi t, we are in a unique position to maximise your return on R&D investment by reducing your R&D costs and increasing your R&D related retained profi ts.

R&D GRANT APPLICATIONS

We use our extensive technical and fi nancial R&D experience to help you swiftly identify and secure the most suitable R&D grant funding available.

HMRC R&D AUDIT SUPPORT

Leyton has solid experience in successfully supporting companies, both existing clients and new customers, through the HMRC audit process.