R&D tax credits have been around for a number of years, but there is still some mystery surrounding them and what they mean for business. The UK government is looking to ensure business is efficient and ready for whatever challenges that Brexit brings, so they support companies that are taking a commercial risk in order to up their game. It is a system that is ideal for a large number of businesses across the United Kingdom, and we have helped people to secure the cash that has been made available. 

But if you don’t know enough about R&D tax credits then you don’t know where to start. You can see the money from an R&D tax claim back in your bank account in a matter of a few weeks, so it pays to know if it will work for you. Although R&D tax credits could be available to just about anyone, there are some industries that are ideally placed to take advantage of this scheme. If you are unsure about any of this then get in touch. In the meantime, sit back and relax with our guide to the industries that are perfect for R&D tax credits – 

Manufacturing 

The manufacturing sector is perfectly placed to take advantage of R&D tax credits. If you are in a business that produces new products, then there will be a very good chance that you are eligible for a claim. If you come up with an idea for a new product, then there is inevitably a period of making prototypes, testing and trialling before it is ready for the market. This period of uncertainty is research and development in action. Even making alterations or additions to new products is seen as R&D as far as the HMRC is concerned, so you can make a claim.

But, there is even more. There are other reasons a manufacturing business might have a valid R&D tax claim on their hands, such as – 

• Installing a new machine and integrating it with your existing ones 
• Making changes to your product because of new legislation 
• Setting up a new process to become more efficient 

Even a product that didn’t work and ended up being discarded before going to market can be part of a valid R&D tax claim so don’t think that a failed project means you are totally out of pocket. 

Manufacturers have a series of challenges every time they make any one of these changes. They face obstacles and have to work their way around them. This means that they don’t know the outcome from the very start. They have to research, produce and test to get to the end result. It is this process of researching and testing that the government is trying to reward. Manufacturing businesses are one of the industries that are perfect for R&D tax credits but even so, the claim needs to be submitted correctly to secure the cash. 

We find that the best R&D tax claims made by manufacturing businesses take the financial figures from the leaders or their accountants and mix these with the technical knowledge of the production team. You will need to explain to the tax man the process you went through in simple terms. And this goes alongside the facts and figures to provide a full picture to the HMRC. Then, and only then, can they make a decision on whether to pay money out to a manufacturing business on the back of their R&D tax claim. 

Food and drink 

This is one of the top industries that are perfect for R&D tax credits but also one of those that are poor in making claims. Food and drink businesses are performing research and development all the time – they may just not classify it as such. A new flavour, a change in ingredients or move to cut sugar are all R&D projects as the process is about more than just making a simple change. Cutting sugar, for example, will change the taste. Other ingredients may need to be added and the final product will need to be taste tested to ensure it meets the demands of the public. 

Food and drink businesses do this all the time. If you think about what makes a food and drink business different to its competitors, then this will be centred around – 

• Using different ingredients 
• Making the products in a distinct way 
• Having flavours or varieties that others don’t 
• Having a healthier twist 

To make a food or drink that is unlike to what else is offered on the market means that the producer needs to think about how to make this happen, and whether the market wants what they are proposing to make. 

These processes are all about research and development. We work with businesses from those that come up with a completely new alcoholic drink to those that have worked hard to reduce the salt content in their food. It is refreshing to know that all of this hard work, time and effort is being supported by the government in the form of R&D tax credits. 

The average size of a claim we make on behalf of our clients is over £35,000 so you can see the difference this can make to a business of any size. If you are a food and drink company, then we want to speak to you today. Get in touch and find out why there might be an R&D tax claim sat in your business waiting to be submitted. 

Software development 

There is a lot of confusion over whether software companies can make R&D tax claims. In the past, this was an area where there was a lot of scope to make a claim. But it appears that the HMRC have tightened up the criteria over recent years. But don’t despair. Software companies are still one of the industries that are perfect for R&D tax credits – as long as you know what you can claim for. And that is where you need the assistance of n expert. We have a 100% success rate with R&D tax claims because we understand the intricacies of the HMRC rules. 

With software development it isn’t the end outcome that the HMRC is interested in – it is the way in which the problem is solved that they want to know about. For example, developing another Customer Relationship Management system or CRM that works in the same way as other CRM systems already in widespread use won’t actually qualify for R&D tax credits. But if you have to integrate this with existing systems and this poses a series of technical challenges then the work you put into overcoming these challenges may well see an eligible claim. 

Think about the developmental challenges (the architecture and the algorithms) as these are far more important than considering the end function of the piece of software. 

Software development is an industry where you can easily have a number of claims for R&D tax credits over a year. Think of each development as a project. As you work your way through these projects, keep notes of all the issues faced and how they were resolved. This will help you to pull together all the paperwork needed by the tac man at the end of the year when it comes to your claim. If you have all the relevant information to hand, then this is far easier than trying to remember back as you complete the forms. This will also raise your chances of the claim being successful. 

Life sciences 

This is a large and growing sector that is widely seen as one of the top industries that are perfect for R&D tax credits. Life sciences is all about looking after the health of people, and as technology improves, the applications to keep us alive, free from disease, fit and healthy increase. Some of the technology is cutting edge, including linking the home and hospital to monitor progress and save valuable time. As we learn more and more about the body, the potential for cure is huge. But it isn’t easily come by. 

Many of the solutions are based in software or manufacture, as outlined above. But this is an industry all of its own with companies developing some amazing results for people with conditions that could seriously threaten or impair life. The fact that these businesses can make such a change to the wellbeing of people is admirable. Added to this, the way that the research improves our overall knowledge is something that the HMRC is looking for. Their definition in this area is – 

‘Your project must aim to create an advance in the overall field, not just for your business. This means an advance can’t just be an existing technology that has been used for the first time in your sector. 

The process, product or service can still be an advance if it’s been developed by another company but isn’t publicly known or available.’ 

Source HMRC website. 

This pretty much sums up what businesses in the life science industry do with their time. Coming up with new pharmaceuticals, devices or technology to manage health is an everyday facet of life in this industry. So, if you come up with new ideas for life sciences and develop these there is a strong chance you have an R&D tax claim on your hands. 

Engineering 

One of the top industries that are perfect for R&D tax credits is that of engineering. Looking at the problems of the world and providing solutions for them is everyday practice for engineering firms. Whether it is related to construction, resources, chemicals or any other facet of engineering there is a high chance that an engineering firm is involved in research and development on a regular basis.  

The traditional view of R&D is people in white coats in a laboratory studying and coming up with solutions to some challenging problems. Indeed, there can be some of this related to engineering activities. But much of the design work for this industry is now carried out via the computer screen. Engineers will be faced with many challenges throughout the course of a year. There will be a large degree of uncertainty as they understand these problems fully and deal with them as they arise. And this may not always be the end of things. Dealing with one issue can lead to a number of future issues to occur, as making a change can cause a ripple effect. 

R&D tax credits are suited to engineering companies because they put in a great deal of time and effort to overcome challenges and uncertainty – it’s in their DNA. Think about engineering projects and you have pretty much come up with the perfect case study for R&D tax credits. And this is what makes things easier when dealing with the tax man. You don’t want a long-winded process to reclaim the tax that they have put aside for innovative businesses. We all know that dealing with the HMRC can be a pain. But R&D tax credits are set up to be as painless as possible. Follow the rules and you will be successful. If you want a professional team to work all of this out for you then get in touch and find out how we can help. 

Consultancies 

We work with a number of consultancies and have found that they are an ideal candidate for R&D tax credits. Why? Well, they work on a number of projects throughout a year. Each of these projects deals with a specific problem or challenge their client has. For instance, a consultancy that specialises in helping their customers convert their energy production into something that can be accepted and used by the national grid will carry out a series of tests and processes for each customer. Some of this may require new equipment or a new process to ensure they have made all the adjustments needed to help their client. Each of these is a project that can be considered for R&D tax credits. 

This is a large UK industry that has matured over the last 20 years or so into something that helps business to survive, operate and grow. The majority of businesses don’t have a specialist for every individual aspect they they might need at some stage in the future. They buy this in rather than recruit and train it into their company. These specialisms are covered by the consultancy business. 

And this is just one example. There are consultancies up and down the United Kingdom that spend every day all day assisting people to overcome the problems their business encounters. This is where organisation comes to the fore. A consultant might not be able to recall at the end of the year all of the projects they have been involved in. So, making notes as you go along is the most important aspect of managing an R&D tax claim for a consultancy. Trying to recall all the small issues and how they were overcome at the end of a tax year can be a thankless task. Checking notes and putting these onto a report is a much easier way of working. If you would like some advice on how to manage your R&D tax claim from the start of the year, making it easier to submit a claim, then please get in touch and our expert team will be only too glad to help. 

Technology 

The tech industry is huge – and growing. This is one of the boom areas the UK government hopes will help us to face the challenges of Brexit and develop as a nation in the coming years. Of course, places such as Silicon Valley, New York and Beijing are seen as major players in the tech market globally. But the UK is a strong challenger, with London and the North East particularly strong when it comes to technology hubs and innovative businesses. And, you’ve guessed it, tech companies are one of the industries that are perfect for R&D tax credits both no and in the future. 

There are a number of challenges the tech industry faces, such as hiring the best talent and continually coming up with new ideas, but this is a part of the UK economy that is showing growth and little sign of slowing up. Tech businesses solve problems all the time, as well as bringing innovation to our lives. They help us to live an easier life. It is comforting to know that the tech industry is there looking into solutions for our everyday living. 

They thrive on funding as many ideas don’t come to fruition. Tech business is supported well by the UK government in terms of grant funding as well as R&D tax credits. This is where an innovative business needs to be careful. It isn’t impossible to receive R&D tax credit when you have already been funded via a grant, but you need to know your stuff. The HMRC website is filled with all the information you need to know when submitting and R&D tax claim – including the rules surrounding grants. This information is updated regularly as the rules change. So, make sure you read up again just before you submit to confirm you are not wasting your time. 

Alternatively, you could work with us. Our team stay on top of all the changes the HMRC make regarding R&D tax credits. That’s our job! This means we can advise you accurately and deal with the tax man on your behalf. We don’t charge an up-front fee, don’t charge a fee at all unless we are successful and deal with any enquiries for you. This means you can get on with the important work of running your business. This means you don’t have to wade through the rules and regulations yourself. Just lean on our expertise and we will do all the hard work for you. 

Accountants 

We find that accountancy is an industry where there are R&D tax claims ready to be submitted. R&D tax is quite a specialised area of accountancy, so not all accountants know the system. We are here to help and support accountants in two ways – 

1. We help them submit their own claims 

1. We help their clients too 

This means you get extra sources of income for your accountancy business. You can receive tax relief from your own claims and earn both respect and a bit of cash from letting us help your clients too. It’s win-win when you work with Lumo. Accountants work hard to help their clients make the most of their money. But if you don’t submit maximises claims for your innovative customers then you are not giving them the very best service you can offer. That’s where we step in to help.  

If you are an accountant and want to speak to someone about R&D tax credits, then you are in the right place. We are not an accountant ourselves, which means we are here as a support function – not a competitor. There is enough to do in terms of supporting your clients without learning the intricacies of another government tax scheme. If you want to find out more then drop us a line. 

There is so much more 

We can never write an exhaustive list of all the industries that are perfect for R&D tax credits because there are so many. We have worked with many innovative companies to help with their R&D tax claim, including – 

• Alcoholic drinks businesses 
• Website chat box producers 
• A printing company 
• An electrical business 
• A building company 

• App developers 
• Food businesses 
• Even a company that helps beehive owners 

We actually find that there are R&D tax claims in many of the businesses we speak to. It’s sitting there waiting to be claimed. The business owner either doesn’t know R&D tax credits exist or doesn’t think that they apply to their business. 

It’s time for action. It’s tome to find out if you have an R&D tax claim sat in your business, waiting to be uncovered… 

Pick up the phone. We’d love to hear from you. It takes less than half an hour for us to let you know – 

1. If you have an R&D tax claim in your business 

1. The potential size of that claim 

Half an hour of your time and you could find out if there is £35,000 due back to you from the HNRC – that’s the average size of a claim we make on behalf of our clients. Imagine the difference this could make to your business. Imagine waking up in 4 to 6 weeks’ time (that’s all it can take) to find correspondence from the HMRC to say that your R&D tax claim has been successful. Wouldn’t that be satisfying. 

Start today. Explore this important government incentive. Get in touch.