Software Service companies are often engaged by companies in various industry sectors to undertake bespoke Software development owing to their technical expertise.
This technical expertise often leads to the software service companies working on projects that qualify for R&D Tax Credits. However, there is an added complexity for Small and Medium-sized companies, in that R&D funded by a large company cannot be included in a small company (SME) claim.
Whether funding was received is one of the major concerns for small software service companies claiming R&D Tax Credits.
Companies can include funded projects in the RDEC regime (but not in the small company SME regime), which means that many service companies will have to apportion costs between the SME and RDEC regimes.