As a Harrogate based business, we always get excited as the Great Yorkshire Shows approaches. After all, it is one of the main events in the local calendar. As more than 130,000 visitors are expected to descend upon the town, this years’ 160th edition will be showcasing the very best of food, farming and rural life, over the three days of the show.
As we’ve wandered around previous shows, we’ve always been fascinated by all of the engineering and technology on display that goes into making the UK agricultural industry the success that it is.
But this got us thinking – why is it that the agriculture industry has a relatively low take-up for R&D tax relief?
According to the latest statistics from HMRC for 2016, the Agriculture, Forestry & Fishing industry only had 110 organisations making claims under the SME scheme, claiming a total of £5 million. That represents an average claim of just £45,455, well below the SME scheme average of £57,386 and the number of organisations claiming, at 110, is very much below what would be anticipated from an industry that employs 450,000 people and contributes £9 billion to the UK economy.
The good news is that these figures are a 29% rise on the previous years, but we still believe that many Agricultural Technology (Agri-tech) companies are missing out on this valuable tax relief.
So why are so many businesses missing out?
Although the R&D tax relief scheme has been around since 2000, there is still a significant number of SME’s that aren’t aware of it. This isn’t just in the Agricultural sector either, we see it across the whole spectrum of industry. HMRC are aware of this and are taking measures to publicise the scheme, but marketing and publicity isn’t their specialism as we’ve seen over the last 18 years!
2. It isn’t applicable to us.
The term Research & Development creates perceptions of people in white coats and high-end research, meaning a lot of businesses dismiss the scheme as they don’t see that they are doing this type of work. While high-end research is eligible, the scheme isn’t restricted to this. If your business is developing new, or making significant advances in current, materials, products, or processes, then the work you are undertaking could be eligible under the scheme.
3. Poor historical advice
Time and again we have spoken to businesses which, historically, have been advised that they don’t qualify for the scheme. Such advice, handed out by their “trusted advisor” clearly indicated the advisor’s lack of understanding of the scheme, reinforcing the businesses’ belief that they aren’t eligible.
The agriculture industry faces many challenges in the UK. Technology is being used by Agri-tech companies to overcome these challenges through a variety of approaches including drone technology, robotics, Internet of Things (IoT) and big data, or indeed engineering and machinery developments. In fact, the scope for the advancement or substantial improvement in new and current technology is enormous throughout the sector.
Agriculture Technology, or Agri-Tech as it is known, is fast becoming one of the world’s fastest growing and exciting markets. It is a multidisciplinary field including engineers, technologists, and scientists and encompassing both start-ups and established companies. The goals are clear: increased productivity, reduced prices, and respect for the environment.
Let’s take a closer look at some thriving areas of Agri-Tech R&D.
Data, data everywhere
Big data and the internet of things is already making an impact on agriculture in the UK and globally, though most of its potential remains untapped currently. The future potential for increasing productivity, reducing costs and taking care of the environment is huge.
Today sensors can monitor soil quality and moisture levels, record the effects of alternative fertilisers on crop performance, and track the spread of disease. Data can be stored in the cloud and analysed using a range of sophisticated tools and aggregated across multiple farms to create tremendous synergies.
Forward-looking farmers are increasingly adopting robotic farming for watering their crops, applying fertilisers and pesticides, and even harvesting. Robots don’t need to sleep and can effectively work 24/7 allowing farmers to harvest at optimal times and so avoid crop losses. Enormous resources are being invested in developing the next generation of Agri-bots.
Drones provide a cost-effective way of monitoring crops allowing farmers to survey hundreds or thousands of acres in hours providing high definition images that can be used to identify disease, pest and weed infestations, and optimise spraying regimens.
Vertical farming is proving to be the most efficient farming scheme on the planet. By stacking crop trays indoors, farmers can minimise their use of land, water and other resources. As vertical farms can be set up anywhere, farmers can also reduce transport costs by farming close to a transportation hub.
Potential savings are enormous, for instance, labour costs may be halved; energy costs reduced by a third, and water usage decreased by over 90%.
How Agriculture can benefit from R&D tax credits
These are just some examples of where Agri-tech is making an impact, and if you are involved in developing, prototyping, or deploying such solutions then you should certainly talk to an expert about R&D tax credits, but many other areas are, such as engineering development are as likely to qualify.
In fact, the development or appreciable of any new process or technology to increase yields, improve efficiency, to optimise quality, to reduce costs and minimise the environmental impact of farming, and that doesn’t rely on increasing land usage, has an excellent chance of qualifying for the scheme.
With a potential financial benefit of up to 33% of research and development costs, a successful R&D tax credit claim could have a significant benefit to your business.
If your business has been involved in any kind of process or product development and you feel you would benefit from a no obligation assessment by our technical team, then please get in touch with TEQ Group.
If you have received negative advice in the past, don’t let that discourage you. We’ve made a number of successful claims for clients who have been wrongly advised in the past. Farming is changing at a pace, so don’t let bad, out of date, advice hold you back. Feel free to contact TEQ Group as we are happy to give a no obligation assessment on your project eligibility.
Enjoy the show
Whether you are exhibiting or just visiting, there is so much to see and do it is impossible not to enjoy the Great Yorkshire Show, but as you wander round do keep your eye out for new Agri-tech and admire how all these new developments will make a positive difference to agriculture.
If you are wondering whether your agriculture developments could qualify for a R&D tax credit claim contact our technical team on 01423 815299 for a free no obligation assessment, or take a look at our R&D Tax Credit Page.
Contact TEQ Group