Credit Where Credit’s Due – Food and Drink and R&D Relief

Despite the Research and Development (R&D) corporation tax relief scheme being around for a good number of years, the food and drink manufacturing sector continues to be one of the worst culprits for not making a claim.

Recently, the government has released guidelines aimed at reducing sugar intake by 20% in the next three years. This is just one ‘trigger’ which may prompt R&D work eligible for tax relief.

Other potential eligible activities, many of which directors sometimes view as routine operations include:

  • Creation of new flavour profiles/products
  • Improvements to existing flavour profiles/products
  • Reducing salt levels/calorie intake/preservatives within products
  • Incorporating new plant and machinery into production processes

Under the R&D tax relief scheme, eligible companies can claim an additional 130% corporation tax relief on qualifying expenditure, potentially going back two financial years. This relates to expenditure incurred on wages costs and materials conducting R&D work, as well as potential software, utilities and consultancy costs.

In simple numbers, a company with £100,000 of qualifying R&D expenditure (there is no minimum or maximum limit) can reduce its annual assessable corporation tax profits by £130,000. This gives rise to a £24,700 saving at a current 19% tax rate.  There is also relief available for loss-making companies by way of a repayable tax credit from HMRC.

My advice to food and drink manufactures would be to review your activities with an expert over a non-obligatory meeting to determine if you would be eligible to make a potential claim.

R&D Tax Credits – Are you missing out?

By: Tom Wilkinson   Research and Development Tax Specialist

 

Tom-Wilkinson-176x176

R&D Tax Credits

….. Are You Missing Out?

 

Many trading businesses often do not realise they are or have previously undertaken Research & Development (‘’R&D’’) activities in their business.  We are successfully securing R&D tax credit claims for clients.  The credits are generous and allow small and medium sized businesses to claim 230% (from April 2015) of actual R&D costs incurred for up to the past 2 financial years.

So, if you have incurred R&D expenditure of say £100,000 on a project then you can claim £230,000 as a credit against profits in the particular year(s) incurred.  This could generate a refund or tax saving of £46,000.

R&D Claims shutterstock_278684120

Our fees are entirely success based and we will be happy to discuss these further.  Pierce have a good working relationship with HMRC’s specialist R&D tax units and have a 100% track record with all claims.
We have helped our clients claim over £2 million of qualifying Research & Development relief and we could help yours.

R&D to do shutterstock_8137816

The definition of R&D is quite wide and it is worth considering if you have….

  • Made bespoke products or customised products
  • Developed any new products or involved with introducing them
  • Made any environmental improvements to your processes
  • Consistently made manufacturing processes improvements
  • Carried out design work in-house or sub-contracted design
  • Carried out prototyping or made models, patterns or tooling
  • Developed or improved any in-house software
  • Changed the composition of your products in response to changes in legislation
  • Consider yourself to be a market leader in a product, process or technology
  • Regularly problem solving to meet your customers’ needs

Many companies are unaware of the activities that can qualify for R&D relief.  Pierce C. A. Limited have specialist skills and knowledge of the R&D tax system and are able to help you identify qualifying projects and formulate a successful claim.

R&D Feedback shutterstock_146554451

 

Client Testimonials

From David Baxendale at Promedics Orthapaedic Limited

Tom Wilkinson from Pierce proactively found and recommended corporation tax savings for our company that resulted in a 2 year corporation tax refund. He worked under his own initiative and ensured that HMRC agreed with his calculations. Tom’s drive and professionalism was first class and we would highly recommend his and Pierce’s services.”

From Richard Mottram at Hills Panel Products Limited

Pierce compiled an extremely detailed and comprehensive Research and Development Tax claim on the company’s behalf which lead to a significant corporation tax saving.

The report and associated computations were a significant improvement from our previous R&D tax advisers and was also undertaken in a very timely manner”

 

R&D Tax Relief – update

Idea r&d shutterstock_215445892

R&D Tax Relief – Update

By: Ben Smith

Research & Development Tax Relief – update on the take up of this valuable relief

HM Revenue & customs (HMRC) has recently published its annual statistics for company claims for Research & Development (R&D) tax relief claims. There continues to be an increased uptake in claiming the generous relief, partly as the relief becomes even more generous and partly as more and more companies become aware of the relief for the first time. The data is for the 2012/13 financial year. The headline statistics are:

  • Since its introduction in 2000 over 100,000 claims have been made by over 35,500 different companies claiming in excess of £9.5 billion in tax relief
  • 15,930 claims were made in 2012-13, an increase of 26% over the previous year; qualifying costs within the claims totalled £13.2 billion, 10% higher than the previous year
  • “Manufacturing”, “Professional, Scientific and Technical” and “Information and Communication” sectors accounted for 77.1% of the claims and 80% of the total amount claimed (sector data based on SIC2007 coding for claimant company)
  • 8,740 claims by Small and Medium Sized Enterprises (SMEs) (being a very generous definition of such for this purpose) reduced their tax bills whereas a further 1,220 SMEs claimed payable credit (cash back) as they were loss making. 3,050 SMEs made a claim for a combination of tax deduction and cash back
  • Although SMEs make up the greater number of claims, 80% of expenditure claimed was made by large companies (£10.6 billion compared to £2.6 billion for SMEs)
  • 580 SME companies claimed under the large scheme as sub-contractors to large company R&D
  • 545 claims were made in the North East of England, 1,545 in the North West of England, 1,065 in Yorkshire and Humber and 905 in Scotland, claiming £25m, £85m, £45m and £45m respectively. Over 40% of claims are made by companies in London and the South East. (region data based on registered office)

What’s stopping you making a claim?

There are still many companies failing to make claims for various reasons. Our experience shows that generally business owners, like yourself, usually think that some or all of the following apply:Although SMEs make up the greater number of claims, 80% of expenditure claimed was made by large companies (£10.6 billion compared to £2.6 billion for SMEs)580 SME companies claimed under the large scheme as sub-contractors to large company R&D

  • We are not doing R&D – many companies do not initially realise that their project qualifies as R&D
  • Claiming the relief is complicated – not if you seek good advice
  • The costs of claiming outweigh the benefits – this is rarely the case and our charges are structured based on the tax savings generated
  • We cannot separately identify costs – HMRC does not expect you to reinvent your accounting records to make a claim and will accept some elements of estimation
  • We’ve received a grant towards R&D or capital expenditure, therefore we can’ have the tax relief too – this is by far the biggest misconception. The receipt of a grant may affect how much additional tax relief the company can claim but you can have both!

What tax relief is available?

The three tax reliefs for innovative companies are very generous and are:

  1. R&D tax relief as above. 125% additional relief on costs for SMEs, 30% for large companies or SMEs with grant funding or subcontractors to large companies. New Research & Development Expenditure Credit (RDEC) for large companies to allow for payable credit as an alternative to the 30% relief
  2. Patent Box – an effective 10% rate of Corporation Tax on relevant profits from patents
  3. 100% capital allowances for assets acquired, including buildings, used in R&D

How we can help you

We have many years’ experience preparing R&D claims for a range of businesses. We have a 100% record with HMRC – none of our claims have been reduced or rejected by HMRC. In the previous 12 months we have secured R&D tax refunds in excess of £500,000 for our clients. We can also help you claim R&D tax refunds for previous tax years if you haven’t previously made a claim.

We offer a free no obligation review of your business activities to identify any R&D tax planning opportunities for you. Contact either Ben Smith or Tom Wilkinson by email or phone 01254 688100 to find out more.

We’ve received a grant towards R&D or capital expenditure, therefore we can’ have the tax relief too – this is by far the biggest misconception. The receipt of a grant may affect how much additional tax relief the company can claim but you can have both!

 

Press Release: Ben Smith promotion to Associate Director

The directors are delighted to announce that with effect from 1 October 2013 Ben Smith will be promoted to Associate Director of Pierce C A Ltd.

bensmith

Ben Smith promotion to Associate Director

Ben joined Pierce in July 2005 and trained with the firm before qualifying in July 2008.  A short spell working in industry during 2010 then followed before he re-joined the firm in February 2011.  Since returning Ben has managed a number of client relationships alongside our Chairman, Graham Boyes and has developed a niche expertise in Research & Development and Patent Box tax planning opportunities.

Ben already runs a successful networking breakfast group to build relationships and over the coming months, following his promotion, Ben will develop his own client portfolio and take responsibility for a number of existing client relationships that he is already supporting.

Additionally Ben will continue to develop his role within the firm and continue to work closely with Graham Boyes who in time will hand over a number of relationships to continue the firm’s succession.

Graham Boyes, Chairman of Pierce Group Ltd describes Ben as ” a highly capable enthusiastic young man and without doubt one of the best that I have worked closely with during my time at Pierce and who has the skills and abilities to become a leading regional business adviser. We are delighted with his promotion alongside our existing team of Associate Directors and Directors adding strength to our growing team”.

Any enquiries in relation to this press release to Paul Warren, Managing Director of Pierce Group Ltd

 

 

Research and Development Update

In a continued effort to turn the tide of UK technology and manufacturing leaving for overseas shores, the Chancellor’s most recent budget increased the Research and Development enhanced tax Continue reading