R&D Tax Relief Case-studies
Managing the complexity of a business requires a range of financial, accounting and legal skills. The key is recognising when to call in additional assistance and knowing who is best placed to provide it.
We call this “Joined-Up-Expertise”.
Experience has taught us that a client will always benefit when their professional advisers work transparently and effectively together.
As an example, we work closely with an accountancy firm, Pursglove & Brown whose expertise includes claiming Research and Development (R&D) tax reliefs that support companies working on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.
Claiming R&D Tax Reliefs
Any progressive, process driven company, irrespective of sector, should consider whether they have an R&D claim. Initiatives to appreciably improve existing processes, systems, products and services or duplicate their outputs in an appreciably improved way (smarter, faster, cheaper) should be considered.
Significant cash flow benefits
R&D tax relief can result in significant cash flow benefits, allowing businesses to fund future innovation and bring subcontracted R&D activity in-house. There is continued Government and HMRC goodwill to make this tax relief work and a key policy of the government is to raise R&D investment to 2.4% of GDP by 2027.
Two examples below of recent work conducted by Pursglove & Brown illustrate the potential benefits:
Company 1 – Bespoke display counter manufacturing
- Total Corporation Tax savings achieved over 2 years: £243,099
- Headcount – 68
- Turnover – £7.65m
The R&D claim was based around ongoing development of specialist counter displays and refrigeration systems.
An onsite walk through of the manufacturing process took place and as part of a time and motion analysis, key departments and individuals involved with the product development and prototype trial and error stages were identified.
A review of materials consumed during these prototyping processes and specialist subcontractor services required to develop improved solutions revealed further qualifying expenditure.
Company 2 – High purity process transfer hoses, valves and tubing component manufacturing
- Total Corporation Tax savings achieved over 2 years: £56,510
- Headcount – 8
- Turnover – £1m
Extensive research and in-house proof testing (consuming materials and developing tools and jigs in the process) enabled the company to develop a product that set new safety standards and it is currently in the process of a patent application for the novel design.
Working openly and effectively with accountants, solicitors and other professionals.
Thinking outside of our own narrow professional “silos” is becoming increasingly important as we work with clients who have complex inter-disciplinary needs.
At Parkgate we are happy to work with your existing professional partners when you have them or introduce you to our own contacts if you prefer.
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