The UK’s manufacturing sector leads the way when it comes to investing in and delivering innovation. The sector is responsible for generating 70 per cent of business-led research and development (R&D) nationwide with manufacturers’ spending on innovation outpacing the trend for the economy as a whole.
In the most recent HMRC statistics for the 2016-17 period, UK manufacturing companies made more than 10,000 claims covering around £8.3bn of investment in innovation which secured over £990m in R&D tax relief. While it clearly continues to deliver significant benefits to innovation-focused manufacturers, claiming for R&D tax relief can be a complex and time consuming process. Getting it wrong can lead to rejected claims with significant financial implications. Finding a genuine specialist employing knowledgeable and experienced people who understand the complexities and associated business risks within your sector is therefore critical.
To ensure any would-be adviser is up to the job of managing a claim and able to help a company secure an appropriate rebate, there are a few important questions that must be considered.
Firstly, do they grasp the importance of understanding the technical aspects of a company’s R&D activity and the context of its technical activities? Trained and technically qualified consultants can add real value to the discussion and review of the processes involved by challenging the validity of the ‘technical uncertainties’ identified. This includes being able to differentiate between ‘unknowns’ and ‘uncertainties,’ as well as establish and document the existing industry baseline for knowledge and understanding at the start of the project.
A good adviser should also scrutinise assumptions influencing the approach to resolving these challenges, ensuring a more accurate claim for eligible activity which, through an expert knowledge of HMRC’s qualifying criteria, can also cover additional aspects a client may not be aware of. An adviser with this high level of technical knowledge could very well influence a company’s approach in managing future R&D projects.
Another key question is whether a provider is able to write the technical report, justifying why R&D activity is eligible for relief. An R&D tax relief adviser puts their own reputation on the line as much as their clients when they write the technical report for a claim. This approach benefits a client, freeing up their time and resources, and it ensures a higher level of objectivity for a claim. The report should answer HMRC’s key questions and set out a clear and compelling argument for tax relief. It should also avoid emotive language and highlight the key information required by an inspector. This approach can help a company avoid awkward questions or unnecessary delays and, crucially, lead to a successful claim.
A final point to consider is whether an adviser is able to deal with any potentially tricky questions that might arise as a result of an R&D tax relief claim. It is therefore imperative that they are qualified and experienced in the science and technology areas where an R&D project has been seeking to push the boundaries of knowledge and understanding. Put simply, the adviser should be the person who is best-placed to deal with any technical enquiries and be happy to discuss these directly with HMRC.
With Brexit looming and the need for a greater focus on innovation, R&D tax relief will become increasingly important for UK manufacturers. It is therefore essential they are able to find an adviser who can help them secure a fair rebate within any claims.
Carefully considering the above questions before choosing will go long way in achieving that outcome. It will also enable those involved at the heart of a manufacturing company to spend more of their time and energy running a successful business, which could be the most appealing reward of finding the right partner.