X marks the spot: Is R&D buried in your business?
MCS Corporate Strategies
Your accountant is often the first person you approach about your business’ Research & Developments tax credits, but they’re often the worst person to submit your claim.
Ask, “What is R&D?” to an accountancy expert and the likelihood is they won’t have any insight into what goes on in the factory, or on the shop floor – but that is where R&D happens.
Businesses are often surprised that R&D isn’t just about the big changes that happen once in a blue moon; a product launch or a new piece of machinery.
More often than not, the R&D we successfully claim for our clients is in the smallest details – a new part for an old product, or a specialist software upgrade. R&D can occur in any department, and can be found in the most unexpected places.
As such, it takes an expert to spot it.
There are various specialist consultants that are often underused by businesses.
Yes, your first port of call for any financial matter is to go to an accountant, but just as you’d go to a GP if you had a headache, you wouldn’t then expect them to carry out brain surgery.
You’d want a specialist. It’s the same with R&D.
X marks the spot
To successfully find all eligible research and development activity, you need to examine every aspect of a business.
It could be materials, it could be software, but one thing is for certain; it’s always marginal activity, a tiny thing that makes the big thing work.
#Yet finding the R&D that surrounds those small changes can be like trying to find Long John Silver’s treasure. X marks the spot, but you have to have the map to find the X and the tools to unearth the gold once you do.
That’s why experts are so essential for businesses submitting their R&D tax credit claims; not only do we know where to look, we know how to negotiate with HMRC to get to those funds.
Devil’s in the detail There’s one MCS client that always springs to mind to perfectly illustrate the R&D process.
A few years ago, I visited a company who manufactures testing equipment for the Ministry of Defence. Built into this hugely complicated machinery was a small plastic washer.
It looked like something you’d find in B&Q. Surprisingly, this tiny component was critical to the operation of the equipment, and had arguably created more R&D than any other part.
It had to withstand intense heat and high pressures, meaning that everything from its material to its shape to the way it was moulded had been intensely scrutinised before production.
To the untrained eye, it could so easily be overlooked on an R&D tax credit claim.
All shapes and sizes
You’d be hard pressed to find a business that makes a product or delivers a service that doesn’t do some sort of research and development. Since MCS started taking on R&D claims eight years ago, we’ve dealt with just about everything; from fashion to food, engineering to media.
With the exception of Pharmaceuticals, almost every sector seems unaware of the power of R&D and patent box, and the huge value each could bring to their business.
When we first approach companies are, often, suspicious.
We’re offering free money – there must be a catch.
Yet what we’re really providing is a way to recoup funds that have already been spent.
R&D is not just a way to reward businesses for their developments; it’s to encourage them to forge ahead and continue to progress their industries.
After that first cynical claim, we see the same businesses return year after year, spurred on by their tax credit claims to make new advances and reap the financial rewards.
It’s incredibly satisfying to process claims for our regular clients who have gone from strength to strength.
In some cases, that R&D return has even saved companies from the brink of administration, providing a much-needed cash injection that has brought them through difficult periods to thrive once more.
Whether you’re a large or small scale enterprise, a service provider or a manufacturer, a long-standing family business or a disruptive start-up, there could be unrecognised R&D lurking in your activity.
X marks the spot – MCS Corporate Strategies have the expertise you need to find it. Still think your business doesn’t do R&D? You could be surprised.
To find out if you could be claiming, call 01926 512 475 today for a free evaluation with one of our experienced consultants.