Do you know you can get money off your tax bill for R&D? And if you do, are you doing anything about it? Adam Kene, MD of Kene Partners, explains how you can make more from what you do.
As a recent Fespa UK newsletter pointed out, the R&D tax relief scheme has been around now for 17 years and yet many PSPs are not claiming because they do not think their development work is sophisticated enough. The likelihood is that you have heard of it but done nothing about it because it looks either too cumbersome, not applicable or a bit of both. Think again.
Adam Kene, MD of Kene Partners says that “through considerable research we’ve discovered that the most overlooked aspect of tax relief is in the area of R&D. And it is surprising and heartening that a lot of help is being offered by HMRC in precisely this area. Of all the creative enterprises it is, in particular, large-format digital print companies that are the ones most engaged in R&D and which can therefore most benefit from these tax breaks.
“Although the R&D tax relief scheme has been around for 17 years now, very few print companies even know of the advantages it offers. And even the companies that are aware of it may not actually consider it an option because they believe that their development work simply isn’t sophisticated enough to join the scheme. It’s easy to believe that being small, or just being optimally efficient, makes any research into tax relief possibilities either unnecessary or pointless. And where’s the time for that anyway?
“But your customers certainly do not think like that. Customers are hardly neutral actors and those that need the services of digital print companies often demand highly bespoke solutions. Their individual demands may require changes in the types of machinery you use, for example, or alterations to existing machinery. If you, as a director of a digital print company, want to be able to meet the demands of any customer, whether they’re asking for apparently straightforward results or far more complex work that requires any change or alteration in the equipment you’re using to produce the best work you can, the R&D tax relief scheme is almost certainly for you.
It’s not only changes in machinery required for a particular job that may make you eligible for the scheme, but also changes that will help you grow into the future, to increase your overall production capabilities and expand your company, that could make you eligible for an R&D tax break.
You may wish to enhance the quality of your print finishing for example? Or you may wish to use alternative inks or varnishes? Or it may be that the substrates or other techniques you use require experimentation and trial and error. All of the above are also likely to make you eligible for the tax relief scheme.
And then, perhaps, there are your efforts to integrate manufacturing processes into a more automated system that will create further efficiencies and cost-saving? Such an integration requires, of course, the skills and the time of your internal and external engineers. These too can make your company eligible.
Time is perhaps our most precious commodity. In order to claim for any or all of the tax breaks above, the time to actually make out the claim, the paperwork in other words, is only two person-days. And it’s useful to remember that such cost-saving claims can be made not just for present and future R&D expenditure. Claims can be made retrospectively for your previous two financial periods. There are tax benefits for SMEs of up to £33,350 for every £100,000 spent on eligible activities, the claim process is risk free, and there is a cash credit option available for loss-making companies.