Case Study

Big Tax Savings for Tech Start-Up

Helping a tech startup to secure R&D tax credit to fund further expenditure in research and development of their new product.

About the client

Your Octo is a technology-based company in London. It was founded by Dr Rajen Nagar and Dr Bilal Chaudhry in 2020. This is a two-director startup that is focused on developing new technology in digital business cards.

Key Challenges

Your Octo spent a six-figure sum on developing it’s new technology in their first year of business. This was funded by the company directors and not through external investors. Because of this, Your Octo needed additional funds to perfect the technology so that it could become commercially viable.

The directors faced a few burning questions as the product was not ready for generating any income within the short-term future.

  • How does the company fund further development of the project?
  • Should the directors dilute founder shares by introducing investors?
  • Should bank funding or an overdraft be considered an option?
  • Should the directors look at alternative sources, such as the HMRC Research and Development Tax Credit?

Solution Implemented

The client had well-accounted in terms of its costs and attached invoices to each transaction within Xero. With well organised bookkeeping form our bookkeeping service, the experts at Pennyhills with ease were able to:

  • Prepare the technical report to demonstrate scientific advancement
  • Review the qualifying costs which form part of the Research and Development (R&D) Tax Credit
  • Calculate the R&D tax credit
  • Submit the R&D tax credit on the client CT600 for the tax year

Final Outcome

The expert at Pennyhills were able to support Your Octo was able to obtain a Corporate Tax refund for up to 50% of the qualifying expenditure on the R&D spent directly into their bank account. This was done within 9-12 weeks from the submission date.

More than just accountants, they have helped structure my finances in a way that encourages a healthy financial future. I would be happy to recommend their services to any other dentist or professional.

Photo of
Dr Rajen Nagar
Director of Your Octo