A leading accountancy group is encouraging businesses to pursue Research & Development (R&D) during the COVID-19 outbreak, as it celebrates securing £34m in R&D Tax Relief claims for its clients.
The Government’s R&D Tax Relief scheme is still hugely underutilised, but successful claims continue to be paid amidst the Coronavirus outbreak. As such, we at Champion are urging businesses who think they might be eligible to capitalise on the opportunity.
Launched in 2000, the R&D Tax Relief scheme supports SMEs working on innovative projects, by allowing them to save up to £43.70 for every £100 spent on qualifying activities. With an average claim size in cash terms of £46,000 and a 100 per cent success rate, our R&D tax specialists have campaigned to raise awareness of the tax break, encouraging eligible businesses across all sectors to progress applications.
In the last 12 months, we’ve supported businesses in engineering, digital, healthcare, retail, manufacturing, food & drink and utilities, to achieve cash refunds or Corporation Tax reductions from HMRC, which have been used to help companies innovate further or achieve their growth ambitions. Many businesses perform activities which would certify for the relief on a daily basis, without knowing it.
Businesses in any sector which are developing new or improving existing products, software, systems and processes are eligible, and the relief can also be claimed on unsuccessful projects too. Claims can be made against staff costs, costs for materials, consumables such as utilities and software licenses, and sub-contractor costs.
Leading cheese maker, Procter’s Cheeses, which manufactures more than 200 tonnes of cheese each year, worked with us to claim against the purchasing of raw ingredients needed to explore new products and textures, as well as the amount of staff time dedicated specifically to this process. We helped identify almost £145,000 worth of qualifying R&D expenditure and claimed back £29,600 in cash to be reinvested back into the Procter’s’ manufacturing facility.
Tim Procter, cheesemaker at Procter’s Cheeses, said: “The cash we have received feels like a windfall to us. It will go towards a renovation of our factory including an extension to our production room, with new flooring and equipment for our expert team. The money will work to benefit future generations of the Procter family, our team and our customers.”
Meanwhile, innovative software developers, Sevron Ltd, worked with us to identify where it had underclaimed on R&D in prior years. A thorough investigation of activities and processes, as well as a review of claims from the previous two tax years, identified R&D investment of £603,497, on which Sevron Ltd could claim back £99,980 in tax credits.
Dale Allen, founder at Sevron Ltd, said: “Champion have taught me to identify what exactly is R&D claimable, which allows me to better track R&D going forward. The savings identified will be invested into further exciting research projects and has provided a huge boost to our cash flow.”
David Herd, our senior tax advisory consultant, said: “We’ve been leading the charge to raise awareness of the Government’s R&D Tax Relief scheme and the results show; helping our clients claim £10.1m in R&D Tax Relief in the past 12 months alone and we’re pleased to see so many recipients benefit from their claims.
“This tax relief is still being paid out by Government even against the COVID-19 backdrop, and cash refunds at this time can prove lucrative for businesses who face other financial challenges.
“Companies tend to be surprised when we talk them through the scope of eligibility for R&D Tax Relief, with many completely unaware that they could’ve been inputting claims for years. Our team of tax specialists are highly experienced in this area, so I would encourage any business who might have questions about making claims to get in touch for a chat, because you could see your business grow exponentially as a result.”