ForrestBrown is an award-winning tax consultancy specialising in research and development (R&D) tax credits. Their team of chartered tax advisers help innovative businesses grow. This level of specialism means their chartered tax advisers have a deep understanding of the R&D tax legislation and its application to businesses throughout the UK, and creative businesses in particular.
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23/07/2018
New to R&D tax credits? Don’t think you’ll qualify?
Think again… it’s quite possible you will (and it’s easier to find out than you may think).
Research and development (R&D) tax credits are a valuable government tax incentive that rewards UK companies for investing in innovation. If a project meets the government’s definition of R&D, you can recoup a percentage of your innovation costs – up to 33p for every £1 spent.
Before DBA member Rufus Leonard’s first claim, R&D tax credits were a mystery to them. They weren’t sure which elements of their work qualified or what they were worth.
Three years on from their first meeting with ForrestBrown, Rufus Leonard have been delighted with the value of their R&D tax credit – with the returns to date amounting to the £100,000s – and the significant impact this has had on their business.
“R&D tax credits have had a big impact on our business. The incentive was still a new concept to us and we weren’t sure of the value of the benefit we might receive. In fact, the credit helped fund some refurbishment of our premises, which may have been more costly to finance by other means.” Iain Millar, Head of Innovation at Rufus Leonard
The breadth of Rufus Leonard’s R&D illustrates the wide variety of projects that can qualify for R&D tax credits, including internal projects.
With so much to gain from making an R&D tax credit claim it’s really worth taking the time to find out if your company qualifies – find out how below. Quite often innovative businesses have either never heard of them, don’t think they’re eligible, or just aren’t sure if the work they’re doing is really innovative.
You too could be surprised by what your business could recoup.
Rufus Leonard's story
Rufus Leonard are the Brand Experience Engineers. Ever since the founders, Neil and Darrel, started Rufus Leonard 29 years ago, they have been helping businesses create extraordinary experiences for their colleagues and their customers across all touchpoints. Their integrated offer enables them to design, build and fine-tune the engines of Extraordinary Brand Experience – Organisational Engagement, Brand Optimisation, Service Design & Build and Technology. Supporting brands like Lloyds Banking Group, British Gas, Reckitt Benckiser, Royal Mail, Stagecoach, BBC and Aggreko.
Within their scope of work, they have a large digital team that carry out qualifying R&D for tax credits. This includes, for example, projects around technical architecture and platform development and integration.
After their first meeting, the award-winning tax specialist ForrestBrown got to know DBA member Rufus Leonard’s business inside out, identifying both internal projects and client projects that clearly sought advances in technology to deliver successful outcomes.
Internal projects can qualify too
In a 2016 survey commissioned by ForrestBrown, only 31% of respondents (UK business leaders) thought that internal projects could qualify for R&D tax credits. This is a misconception that could be losing innovative companies a fortune.
The qualifying internal projects at Rufus Leonard revolved around building digital infrastructures in which they could more efficiently undertake their QA process and make deployments; and developing frameworks for quickening the production of projects, for example, responsive websites.
Innovating through integration
And then there were the client projects, such as Rufus Leonard’s work with Stagecoach.
The aim was to create an online experience that incorporated mobile ticketing, real time information, personalisation, geo-location, time-tabling and much more – serving all of their 18 separate operating companies.
Part of the challenge of working on something so complicated is to make it easy to use – both front-end and back end. A 30% increase in revenue is proof of the success of the front-end usability, whilst Rufus Leonard were able to develop a back-end that is accessed through a single service layer.
The back-end task was huge and even though there were numerous off-the-shelf or previously developed components that fed into the solution, Rufus Leonard needed to integrate these with 50 different APIs. And where there were limitations in the existing technology, they had to develop bespoke solutions. A lot of this activity qualified for the R&D tax credit.
Digital innovation is so fast-moving that cutting-edge development quickly becomes the norm. ForrestBrown can look through past projects (going back approximately two years) and help companies identify past innovations that qualify.
“Our field had advanced so much in just the previous two years that looking back we felt there was no way the work we delivered broke new ground. But just because something we considered innovative two years ago is not considered an advance today, doesn’t mean the project does not qualify as research and development,” says Iain Millar, Head of Innovation at Rufus Leonard.
R&D tax credits are a valuable government tax incentive that reward UK companies for investing in innovation.
Are you eligible?
R&D is carried out by businesses of all sizes that are developing new or better ways of doing things. To understand if your design business could be eligible, ask yourself three questions:
1. Are you a company that is subject to UK corporation tax?
2. Are you creating new products, processes or services or modifying existing ones? (They don’t need to be physical, digital counts too!)
3. Are you spending money on this work?
For design businesses, your R&D could be:
• A tangible product, or part of a product, that has involved overcoming technical challenges. This could be through industrial design (e.g. a new or improved car seat or medical device), structural packaging (e.g. a new or improved bottle closure) or retail display (e.g. a new or improved point of sale structure).
• A digital product, usually involving bespoke development, that has solved a unique technical challenge for a client.
Further reading
Read Nesta’s comment in CityAM to learn more about why the creative industries need to sit up and listen when it comes to R&D tax.
DBA and ForrestBrown
The DBA has partnered with ForrestBrown, an award-winning research and development (R&D) tax credit specialist, which has been highly recommended by DBA members.
We want to raise awareness of this valuable tax incentive, which rewards technological innovation, amongst our membership.
ForrestBrown can help DBA members determine if your design work qualifies for R&D tax credits with a free eligibility assessment. With their 70+ strong team of qualified chartered advisers, technical specialists and former HMRC inspectors, they can support you in your claim. Their strong technical expertise means that they can maximise the value of your R&D tax credit claim, while ensuring the claim is robust and uses a rigorous methodology. ForrestBrown has a strong reputation with HMRC and has won numerous awards for their work.
Contact Lauralei Chapman-Ludgate at ForrestBrown, stating that you are a DBA member, for an initial discussion to see if you are eligible:
Read about DBA Member Uniform's experience of claiming R&D tax credits
Uniform has been recouping funds for years, enabling the innovation agency to expand its revenue, head count and profitability. We chatted with Managing Director Nick Howe, to discuss how R&D tax credits can enable an agency’s growth. Read the interview here
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