Will the Coronavirus Business Interruption Loan Scheme (CBILS) and/or the Bounce Back Loan Scheme (BBLS) impact an R&D claim?Published Monday, 6th July 2020
Both schemes, like R&D tax relief for SMEs, have been confirmed as Notified State Aid and State Aid rules prevent using more than one for of Notified State Aid on the same project, even if they’re used at different times, and even if you pay the money back. This means:
- If you’ve been claiming SME R&D tax credits, you won’t be allowed to use CBILS/BBLS finance to support any project that has received SME R&D tax relief.
- If you haven’t been claiming for SME R&D tax credits yet, any project that you support using CBILS/BBLS won’t be eligible for SME R&D tax credits, either now or at any point in the future.
The effect of using Notified State Aid on an R&D project is to push the entire project’s expenditure out of the SME scheme and into the RDEC scheme, which gives a return of about 13p per £1 (before tax) rather than the 25-33p per £1 of the SME scheme.
The key points to remember therefore are:
- If you can, allocate the CBILS or BB loan funds as far as much as possible to non-R&D activities
- Document the decision, such as via board minutes, on what the funds will be used for (such as general business operation and not for R&D)
Read more here about how Caldwell Penn can help with your R&D claim
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