Huge tax rebates for R&D in the engineering sector
A UK-based Engineering company which designs and manufactures highly specialist, bespoke equipment for the aerospace, medical and nuclear industries enjoyed an £80,000 rebate under the UK R&D tax credits scheme. Read the following case study to find out more details...
Engineering Company details:
The company employs 38 staff, has a turnover of £2.2m and is seeking to recruit more skilled people as it settles in to its new purpose built premises in the town.
The company develops ways of supporting nuclear decommissioning as well as creating automated systems to improve the packaging of medical supplies. The Managing Director feels there is always a vision of how you want a product to work but it often takes a series of ‘zig-zags’ before you get it to where it needs to be. The company is continually designing, testing, rejecting and enhancing their products.
The MD says:
“I’m convinced that most companies don’t realise how much R&D they actually do. There must be plenty of companies in many different industries across our region that put a lot of development work in to get the product or service they’re delivering to work for their customers.
“It turns out we have qualified for many years for this tax break but it was only when our new accountants Jackson Stephen took one look at the sheer volume of R&D we are involved in and instantly recommended submitting a claim to HMRC.
Receiving this kind of help under the R&D tax credits scheme is worth its weight in gold. The R&D rebate has helped the company grow quicker and it has helped them invest in state-of-the-art machinery such as water jet cutting machine tools.
The MD states:
"We have invested in R&D at the rate of around £50,000-£80,000 a year for many years. Now R&D and the tax credit scheme is a really important part of our tax and financial planning strategy.
“We chose Jackson Stephen as our accountants because a business like ours needs support with proactive business advice and financial strategy. We receive great support from first class individuals within the practice assisting us with the growth in our business.
Derek Armstrong, partner at Jackson Stephen, said: “We make it simple for our clients when making a claim".
Here is how an R&D claim works:
- We conduct an initial appraisal with the management team to examine projects undertaken over a two-year period.
- Where innovative solutions to manufacturing problems have been used we check if this activity qualifies for the relief.
- We work with the company’s finance team to determine the costs incurred by the company in completing these projects.
- Finally, we compile a comprehensive report for HMRC setting out the nature of our clients’ R&D activities, the benefits to the company and how the activities meet the various qualifying conditions for the relief.
So far Jackson Stephen have recovered more than £2m for our clients in the North West of England through this process. As the economy improves and businesses spend more on research and development this tax break will become increasingly valuable for companies in the UK.
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