The UK has an established background in engineering innovation from the invention of the steam engine through to iconic buildings and structures over the centuries. However, what many probably don’t consider is the level of innovation that was needed and how the supply chain may have helped to support them.
From small seeds, mighty oak trees grow
Like this saying, many small ideas have resulted in great innovations and developments. When it comes to engineering it can take many small changes or adjustments to create or finesse a design or product. This testing and adjustment could be research and development and potentially eligible for R&D tax credits.
Although some changes may seem to the untrained eye as negligible or unnoticeable, they can significantly alter how the product works or performs. We have spent many years advising engineering businesses on the eligibility of their work for R&D tax credits. Below are a couple of examples to help illustrate eligibility in this sector.
We worked closely with a toolmaking business that had been previously advised that they were not eligible for R&D tax credits. When we met with them and discussed what they did it became clear to us that there was eligible activity that had been missed.
As R&D tax credit specialists who are also technically minded, we can often discover innovation where many don’t see it. With our personalised and collaborative approach to our initial meetings, we worked with their key staff to discover all possible eligible activity.
Taking into account that we could claim for the previous two years, we were able to achieve a significant tax benefit for the business for their initial and a subsequent claim over four years’ worth over £140,000.
Similarly, we worked with a large packaging manufacturer who was also told that they wouldn’t be eligible for R&D tax credits. Again, we didn’t take this on face value. We took the time to dig a bit deeper as we were confident that there would be some eligible activity.
Our instincts were right and we submitted a claim that spanned two years, resulting in a tax benefit of almost £160,000.
In each example, both companies were undertaking testing and trialling as part of the iterative process to develop and improve their products. This qualified as “research & development” under the criteria set by HMRC. Both examples prove that it is not always wise to take the first advice you get. Not all accountants are trained or experienced enough in R&D tax credits to identify eligible activity. At TEQ Group we are not accountants but technical experts who do R&D tax credits on behalf of clients and accountant practices.
And not forgetting the supply chain
As we said, earlier many innovations require the support of their supply chain. In some cases, the subcontractors or suppliers can be the business that is making eligible innovations which can be applied for in their own right.
We worked with a small manufacturer of precision parts for machinery who believed that as a subcontractor they were not eligible for R&D tax credits. After our initial discussion with them, they soon realised that this was not the case and that the work they did was, in fact, eligible and resulted in a tax benefit of over £55,000.
The reason for this is that subcontractors of parts are often asked to create components to a particular specification, but they are not told how to make the part. As a result, they have to conduct their own research and development, at their expense, to create the component that meets the customer’s specification.
We are here to help
Whether you think you might be eligible, have been told you don’t qualify or just don’t understand R&D tax credits, we are always here to help. We offer a no-obligation initial assessment to see if you are eligible. If we believe you are, we will progress with the application if you are happy. We are so confident of our knowledge and abilities that we won’t take our fee until you have a successful outcome.
So there really is nothing to lose in contacting us for a free, no-obligation assessment. To find out more contact TEQ Group today on 01423 815299 or click the button below and we’ll be happy to offer some advice.
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