registerme
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Post by registerme on Feb 22, 2018 12:03:49 GMT
Say we have the following situation:-
* a company conducts qualifying RND.
* it takes out an RDA loan in the expectation that HMRC will make good on their research and development spend.
* For whatever reason the company fails before HMRC cough up.
Would the adminstrators consider the unpaid but expect HMRC repayment of 33% of the RND costs to be an asset and seek to recover the funds from HMRC?
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liso
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Post by liso on Feb 22, 2018 12:27:38 GMT
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m2btj
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Post by m2btj on Feb 22, 2018 12:55:42 GMT
Say we have the following situation:- * a company conducts qualifying RND. * it takes out an RDA loan in the expectation that HMRC will make good on their research and development spend. * For whatever reason the company fails before HMRC cough up. Would the adminstrators consider the unpaid but expect HMRC repayment of 33% of the RND costs to be an asset and seek to recover the funds from HMRC? Particularly relevant to today's new offering from Archover. On paper the company is worthless & in theory could go down before the 6 months R&D Advance is paid by HMRC.
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elliotn
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Post by elliotn on Feb 22, 2018 13:06:07 GMT
Even if the RD claim was still recoverable (would hmrc pay tax payers' £ to a then defunct company?), we would be in line only as an unsecured creditor. Most confirmation statements suggest that's still a zero sum game. This company may be worth something though as the 2018 BS suggests at least £1M fund raising which unfortunately is not referenced in the docs.
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registerme
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Post by registerme on Feb 22, 2018 13:13:23 GMT
Yeah, it was today's Archover loan that prompted this line of thinking on my part. I don't know the answer. On the one hand you could view it as an asset, on the other I can see HMRC laughing themselves silly over the notion.
And as elliotm points out it's unsecured anyway....
I think I'm coming round to the idea that these (at least with what are effectively startups) R&D claims are more like equity plays.
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dandy
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Post by dandy on Feb 22, 2018 13:33:02 GMT
Yeah, it was today's Archover loan that prompted this line of thinking on my part. I don't know the answer. On the one hand you could view it as an asset, on the other I can see HMRC laughing themselves silly over the notion. And as elliotm points out it's unsecured anyway.... I think I'm coming round to the idea that these (at least with what are effectively startups) R&D claims are more like equity plays. I assume that the RDA loan would be secured by a fixed asset (RDA) debenture so if borrower becomes insolvent the RDA funds are due to the secured lenders under the fixed charge debenture - HMRC cant just avoid the debt because the company is insolvent Of course unlike a genuine fixed asset such as property, the possibility of 'misappropriation' of the funds (when repaid) is a whole separate matter
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ton27
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Post by ton27 on Feb 22, 2018 13:44:01 GMT
Although small at £125k this was all pledged within a couple of hours.
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Post by peerlessperil on Feb 22, 2018 13:58:01 GMT
It appears that HMRC only take claims from going concerns. www.out-law.com/en/topics/tax/corporate-tax-/uk-rd-credits/Although I agree that doesn't quite answer your question of whether you have to be a going concern to receive a claim that submitted before the money ran out.... In practice I suspect it is theoretical - tax credits would get get netted against owings to HMRC for stuff like PAYE before creditors get their paws on it? My musings only, I am no tax expert. Interesting to note that both recent R&D loans come from the stable of a common venture capital backer. |
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elliotn
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Post by elliotn on Feb 22, 2018 14:13:41 GMT
Yeah, it was today's Archover loan that prompted this line of thinking on my part. I don't know the answer. On the one hand you could view it as an asset, on the other I can see HMRC laughing themselves silly over the notion. And as elliotm points out it's unsecured anyway.... I think I'm coming round to the idea that these (at least with what are effectively startups) R&D claims are more like equity plays. I assume that the RDA loan would be secured by a fixed asset (RDA) debenture so if borrower becomes insolvent the RDA funds are due to the secured lenders under the fixed charge debenture - HMRC cant just avoid the debt because the company is insolvent Of course unlike a genuine fixed asset such as property, the possibility of 'misappropriation' of the funds (when repaid) is a whole separate matter Misappropriation not a problem as HMRC notified to pay to AO account. But that's not a fixed asset debenture - this credit is to pay back a 1/3 of Rd for Co's carrying out qualifying Rd, it's discretionary and there's a finite pot. Going concern would seem to be a prerequisite to me. Edit - crossed with peerlessperil
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dandy
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Post by dandy on Feb 22, 2018 14:22:22 GMT
Misappropriation not a problem as HMRC notified to pay to AO account. But that's not a fixed asset debenture - this credit is to pay back a 1/3 of Rd for Co's carrying out qualifying Rd, it's discretionary and there's a finite pot. Going concern would seem to be a prerequisite to me. Edit - crossed with peerlessperil It is not discretionary in the sense of the AC PF - but the costs must have been incurred for acceptable RND matters. You may very well be right about AO account and there being no DB - i had just assumed a fixed asset DB would be the way to go to protect against insolvency whereas without it insolvency is indeed a big risk.
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Post by hugoarchover on Feb 23, 2018 17:28:11 GMT
Say we have the following situation:- * a company conducts qualifying RND. * it takes out an RDA loan in the expectation that HMRC will make good on their research and development spend. * For whatever reason the company fails before HMRC cough up. Would the adminstrators consider the unpaid but expect HMRC repayment of 33% of the RND costs to be an asset and seek to recover the funds from HMRC? Hi registermeI trust you are well? Thank you for your post. 1. A qualifying company is a company that can demonstrate a history of successfully claiming R&D tax credits from HMRC, at least two years of successful claims need to have been made. We only work with companies where a qualified professional adviser is managing the application on behalf of the company. 2. The loan is secured against a proportion of the total value of the claim - that is why we only work with qualified professional advisers who do this day in day out rather than relying on the company. The professionals experience gives us comfort that the submitted claim is unlikely to be challenged and will be paid by HMRC. HMRC payments go to a controlled account, not the Company - we pay back Lenders and then pass the balance on to the Borrower. 3. If the company does fail in this period then HMRC will be very unlikely to pay. This is unsecured lending and of course there is always a risk that a business may fail during the few months before the HMRC payment comes in - rest assured our credit team will thoroughly assess each firm before approving a project. I hope that helps everyone here... Best Hugo
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registerme
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Post by registerme on Feb 23, 2018 18:07:55 GMT
3. If the company does fail in this period then HMRC will be very unlikely to pay. Thank you.
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Feb 23, 2018 19:38:39 GMT
Say we have the following situation:- * a company conducts qualifying RND. * it takes out an RDA loan in the expectation that HMRC will make good on their research and development spend. * For whatever reason the company fails before HMRC cough up. Would the adminstrators consider the unpaid but expect HMRC repayment of 33% of the RND costs to be an asset and seek to recover the funds from HMRC? Hi registermeI trust you are well? Thank you for your post. 1. A qualifying company is a company that can demonstrate a history of successfully claiming R&D tax credits from HMRC, at least two years of successful claims need to have been made. We only work with companies where a qualified professional adviser is managing the application on behalf of the company. 2. The loan is secured against a proportion of the total value of the claim - that is why we only work with qualified professional advisers who do this day in day out rather than relying on the company. The professionals experience gives us comfort that the submitted claim is unlikely to be challenged and will be paid by HMRC. HMRC payments go to a controlled account, not the Company - we pay back Lenders and then pass the balance on to the Borrower. 3. If the company does fail in this period then HMRC will be very unlikely to pay. This is unsecured lending and of course there is always a risk that a business may fail during the few months before the HMRC payment comes in - rest assured our credit team will thoroughly assess each firm before approving a project. I hope that helps everyone here... Best Hugo Refreshing to recieve an answer warts and all upon which to make decisions. Thanks also to registerme for asking the right questions up front.
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Post by eduardo on Apr 11, 2018 20:30:07 GMT
Thanks everyone, really interesting reading your views
What would happen if the business changed where HMRC should pay to ?
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Post by hugoarchover on Apr 19, 2018 9:02:30 GMT
HMRC pay the funds to the professional firm who made the claim on behalf of their client. The funds are then transferred to the Controlled Account with ArchOver.
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