Sports science is booming within the football industry. Innovative new projects and techniques are being used to maximise match day performance and improve player training, continually pushing boundaries of what’s possible in the sport.
These projects often require significant investment. However, many clubs and sporting organisations could be missing out on the full tax relief available to them – either due to to minimal record keeping, or from not realising that their innovations actually qualify for R&D Tax Credits.
We know how important funding is when it comes to innovation so, in this article, we’ve put together our recommendations to guide football clubs and other sporting organisations on how to fully prepare for making an R&D tax claim.
R&D Tax Credits can seriously boost football innovation
R&D Tax Relief is an HMRC incentive designed to encourage innovation, allowing organisations to claim back a portion of their research and development expenditure.
The relief can be significant. We’ve helped sports clubs and societies to claim over two million pounds in tax savings. At Premier League level, we’ve been able to claim back nearly a quarter of a million pounds for a club in a single year through the R&D Expenditure Credit (RDEC) scheme.
These savings can be reinvested back into growth and innovation – allowing for more cutting-edge projects and the hiring of new staff, from sports science professionals to physiotherapists and nutritionists.
And it’s not just profitable companies that benefit. For expenditure from 1st April 2023, loss-making SMEs can receive a credit rate of 10%. If loss-making SMEs spend over 40% of their total expenditure on R&D, they can claim an even higher credit rate of 14.5% (read more on R&D Intensive SMEs). Organisations claiming RDEC on their eligible expenditure from 1st April 2023 will also be able to claim up to 20% in tax credits, regardless of profitability – it’s a generous benefit that gives a very worthwhile financial boost.
However, to claim the full benefit on offer, clubs and organisations must keep detailed records of their R&D activities. Below, we outline the key steps for making a successful R&D Tax Relief claim.
Making a successful R&D Tax Credits claim in the football industry
Maintaining comprehensive records of R&D projects is a prerequisite for making any successful tax relief claim, as organisations are now required to submit ‘additional information’ to ensure that all claims comply with HMRC’s regulations.
Records provide evidence of the work undertaken and the costs incurred, which also helps the process of identifying qualifying activity.
To prepare for making a tax relief claim, organisations should:
1. Identify R&D projects:
Any project seeking to advance in science or technology by resolving scientific or technological uncertainties could qualify for R&D Tax Relief.
To qualify, a project must involve some degree of innovation. This means you will need to demonstrate that your R&D project extends beyond what is currently available in the public domain. This may require expert assistance, as understanding the current capabilities of the ever-evolving sports technology market can be challenging!
Example projects include enhancing equipment, developing new methodologies to measure player strength and hypertrophy, or advancing data analytics to assess the potential of new talent.
Remember, the project does not need to be successful to qualify as R&D. Even failed projects can count if they advanced your knowledge or capability in a field of science or technology.
2. Document the process:
Keep a thorough record of the project from start to finish. This includes documenting the initial challenge, the steps taken to address the problem, the results obtained, and the lessons learned.
Keeping detailed records of your R&D activities, such as meeting minutes or logs of time spent on projects, can significantly strengthen your claim. While HMRC does not typically require documentation as primary evidence, having these records can prove valuable in demonstrating the extent of your R&D efforts while ensuring that you’re fully compliant while claiming.
It’s recommended that you prepare this information within a technical report, which provides a comprehensive account of the project, detailing what the club or organisation is claiming for and how each item aligns with HMRC’s criteria.
3. Track expenditure
Maintain detailed financial records of all costs related to the project. This includes expenditures like staff salaries and consumables costs, as well as costs like utilities.
When allocating costs, expenses, and resources associated with R&D activities, you must use a clear and logical methodology. This will help you accurately identify and quantify the R&D-related expenditures eligible for tax relief.
You can find out more by reading our article: What qualifies as R&D expenditure for claiming tax relief?
How Leyton can help
Leyton has extensive experience in the football industry, working with governing bodies through to individual sports clubs within the EFL, FA and many clubs from the Premier League to League 2.
This experience allows us to help sporting organisations identify whether or not their innovative projects qualify for R&D Tax Credits – and most organisations underestimate how innovative they actually are! We’ve helped sporting societies and clubs go as far as to double their tax credit claims.
Partnering with Leyton is often the first step towards unlocking more funding for innovation in sports science. Our expert tax advisors have been working with HMRC for years, consulting on developing R&D criteria so we know how to ensure that claims are robust and fully compliant.
Speak to one of our experts today to find out more.
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