Research & Development

Have you switched on to R&D Tax Credits yet? 

They’re a Government incentive designed to reward innovation and accelerate growth in UK Companies.

Claims can be made in respect of previous accounting periods (up to 2 years retrospective catch up) and you can even benefit in cash terms if you are loss making.

R&D takes place in any sector and,  although it was introduced 20 years ago, there are vast numbers of qualifying companies that have not made a claim yet.

If a company spends time and money on developing new products, services or processes or enhancing existing ones, then it could make a claim for R&D tax relief.

There are more than 250,000 construction SMEs in the UK, contributing 7% of the UK’s GDP, but less than 1% are submitting R&D tax relief claims and they represent only 4% of all claims.

The average claim value for the Construction sector (per HMRC’s last annual stats September 2019) is £50,279 tax savings (which is £3,000 below the average across all sectors).  The construction sector, with the help of our strategic R&D consultant advisers, needs to redress this imbalance.

Claims can be made in respect of previous accounting periods (up to 2 years retrospective catchup) and you can even benefit in cash terms if you are loss making.

R&D takes place in any sector and,  although it was introduced 20 years ago, there are vast numbers of qualifying companies that have not made a claim yet.

If a company spends time and money on developing new products, services or processes or enhancing existing ones, then it could make a claim for R&D tax relief.

Why have successive governments implemented and widened R&D legislation? 

As an incentive designed to encourage companies to innovate in science and technology thus growing the UK economy as a whole. Indeed, HMRC’s own research shows that the incentive has the net effect of increasing overall tax receipts for the Treasury.

What is R&D?

R&D is defined as undertaking a project which seeks to achieve an advance in science or technology through the resolution of technological uncertainties.  This is a wide definition and purposely so. In practical terms what does this mean?

  1. Creating something entirely new
  2. Appreciably improving what was out there already.
  3. Duplicating what was out there already, but the process to achieve the same outcome was in a new/improved way. A pertinent example of this is where you seek to replicate a competitor’s product without knowing how to do so because the information is not in the public domain as it is a trade secret.
  4. Extending the overall knowledge or capability in the field of science or technology : like contributions to pure research, sponsoring university led projects in-house or as a consortium to define new industry paradigms.

New, Cheaper, Smarter, Faster, Better.

Defining new paradigms is what Changing Streams is all about, incorporating new green technologies, delivering sustainable procurement supply chains and promoting alternative and environmentally friendly solutions also fit neatly into the ever increasing demands of national infrastructure and local authority build projects.

By becoming a partner or member the Changing Streams companies can build on their corporate responsibility whilst adding to their existing R&D baseline profile , saving tax at the same time and contributing to a global movement for positive, sustainable change.

So across what aspect of the built environment do we see R&D claims for tax relief?

  • Specialist drainage right through to specialist roofing and cladding
  • Tooling and equipment design and development
  • Prototyping, including designing, constructing and off-site testing
  • 3D / BIM modelling
  • VR/AR visualisations
  • Innovative use of green or sustainable technology and methodologies
  • Evaluating and determining the most efficient material profile for products and processes
  • Introduction of new or alternative materials to improve or replace components or materials
  • Development of non-standard buildings, including listed buildings and modular construction • Component fabrication, integration and assembly of technically challenging systems (mechanical, electrical, plumbing, HVAC).

The main areas of costs that can be claimed in respect of the R&D activities are:

  • Staff costs
  • Subcontractor costs
  • Consumed materials
  • Agency workers
  • Software
  • Consumables, i.e. heat, light and power used during the R&D process

Given the evolving nature of technical requirements and bespoke customer demands it is more than likely that most innovative construction companies will qualify for this relief. If they haven’t already made a claim, now is the time to be review what is possible with the expert help or our strategic partners at Haines Watts R&D (North West). Please contact us for more information.