Typically Research & Development is perceived to encourage companies in the UK to innovate or take on technically challenging projects. However what many manufacturing smes don’t realise is that businesses can claim R&D tax credits if they improve an existing product or develop a new product for major clients.
In the eyes of leading R&D experts Cooper Parry, a team of experienced professionals who also happen to be engineers, say calling it “R&D” is too complex. Recently having become a patron of manufacturing trade association Made in the Midlands, the highly regarded firm wanted to bust the myths around R&D to the group's 400+ manufacturing members.
In a recent masterclass hosted by Chris Knott, R & D tax partner at Cooper Parry, Chris wanted to prove to members that there is much more to R&D tax credits than white coats, labs and innovation centres. As a trained engineer and tax incentive expert for the last 22 years, Chris is perfectly placed to help manufacturers specifically when it comes to making claims. Chris said:
“R&D encourages innovation, and they keep UK businesses and therefore our economy on the front foot.”
What is R&D really?
The R&D criteria in reality is when a company changes an existing or new product or process. For example if a tier 1 company was to request a product from an sme or mid size company that they do not usually supply, the smaller businesses would be entitled to claim cash back. This also applies to technological uncertainty, if businesses took time out to test a product before putting it to market, as long as they have evidence, this also accounts for a claim. An interesting example of what can also be claimed for is a green agenda or value engineering, businesses need to ensure they aren't missing out on 25%-33% benefit if they are achieving these examples.
How do you claim for R&D?
In the Cooper Parry Masterclass, on 11th January 2022, Chris explained that making a claim is straightforward. However it is important for businesses to get the right advice as HMRC are noticing the shark filled R&D market. In short, all businesses would need to supply is how, what and how much it took to change their product or service.
Due to the mis-information around tax claims in the sector, around 100 new R&D inspectors are ensuring that claims are made correctly. Therefore Chris advises that businesses notify HMRC of their intention to claim. HMRC inspectors spend only 10 minutes on a company’s website before they decide on whether there is a claim. In addition, Chris also advises businesses to put their most recent achievements on the home page of their website, e.g awards and success stories.
For more information or to find out what was said, watch the event back here.