Navigating cashflow issues during COVID-19 – could R&D tax relief be a solution?

Engineering businesses constantly strive to stay one step ahead of the competition, no matter what other external economic factors may be at play.

At a time such as this though, where cashflow and financial pressures are being felt more acutely than ever, have you considered that your business’s attempts to innovate may also be an avenue for reimbursement?

A high proportion of engineering businesses remain unaware that their day-to-day activities qualify for Research and Development (R&D) Tax Relief due to a lack of awareness around the initiative and its benefits.

Of course, there are qualifying criteria, the main one being that you look to make advancements in science or technology within your industry.

In reality, you may already tick these boxes, as new product or process development qualify as research and development activities. Your day-to-day activities could be earning you cash you never knew existed.

Your business could receive £43.70 in tax relief for every £100 spent on qualifying endeavours.

If you’d like to know more about how the process works, you can find out here.

R&D claims can be made against staff costs, material costs, utilities and software licenses, and even sub-contractor costs.

Consider the following list. Have you:

  • Used technology to develop new machines, products, services or equipment?
  • Improved current products using technical adjustments?
  • Turned to product development to answer technical issues?
  • Found more effective ways to produce or deliver products/services?
  • Tried and test new equipment or production techniques?
  • Had a project fail due to technical reasons?
  • Started a project where it was unclear how best to achieve the objective?

This may seem surprising, but if you or your business has done any of the above, you will qualify for R&D tax relief.

Even more surprisingly, 90% of eligible businesses miss out on the R&D tax relief they’re entitled to.

Take one of our clients, Swinton Electro Plating, for example.

Operating for more than 50 years, the plant is home to one of the deepest hard-chrome plating facilities in Europe. The company has developed processes, systems and controls for plating large and unusually shaped objects; they’re undoubtedly innovative.

Swinton had previously decided against pursuing an R&D tax relief claim, following guidance from a member of the Manufacturing Advisory Service who said there wasn’t anything ‘unique enough’ to claim against.

Our specialist R&D advisors first met with the Swinton team in 2014 — and immediately advised them to make an R&D tax relief claim.

Godfrey Evans, managing director of Swinton Electro Plating, said:

“After being told we didn’t have anything to claim for, we gave up and didn’t really think about R&D again until Champion spoke to us about it.

“At first I was very sceptical and worried about the amount of work that may have needed to be done by my team. From start to finish Champion made the entire process simple and have made us more aware of what we do on a day-to-day basis that can be used for future R&D claims.”

If your business conducts work in the engineering sector, then contact our R&D tax relief lead and senior tax advisory consultant, David Herd on or call 0161 703 2500.