The Government wants SMEs to grow, do you have R&D qualifying costs?

The Government wants SMEs to grow, do you have R&D qualifying costs?

It is hard to believe but it’s true, the Government has a vested interest in your business growing and is giving money in the form of R&D Tax Credits against R&D qualifying costs. I’ve helped businesses understand and maximise their use of these schemes if you want to get in touch drop me a line.

If you grow your business then the Government gets great benefit and wants you to do more of the same because:

  • The jobs you create employ people
  • More money is pumped into the UK economy from the profit your products or services generate
  • Your ideas, improvements and creativity drive increased innovation and lead to better products and services
  • Better products and services keep the UK relevant on the World stage

Is this a real thing?

Well, between 2000, when the R&D tax credit schemes were launched, and 2014-15, over 141,000 claims have been made and almost £14.0 billion in tax relief claimed against R&D qualifying costs.

  • By the end of 2014-15, 39,360 different companies had made claims under the Small and Medium Enterprise (SME) scheme.
  • The total amount of R&D support claimed rose to £2.45bn in 2014-15 – an increase of £675m (38%) from the previous year.

That’s a lot of money being handed out to SMEs just like yours across the UK for innovative work to be undertaken.

Isn’t it only London that gets this money? Is my Business Eligible?

It is true to say that the majority of the claims have gone to London and the East.

R&D claims and the amount claimed continue to be concentrated among companies with a registered office in London, the South East or the East of England (47% of all claims and 63% of the total amount claimed).

But it’s not a scheme problem, it mainly because not enough SMEs know that this money is available.

Also, they are confused as to what constitutes eligible R&D expenses and therefore do not even attempt a claim as they don’t think they are eligible.

How do SMEs benefit?

The most common way for SMEs to claim R&D tax credits was by a deduction from corporation tax (CT) liability, with 10,935 claims made this way for 2014-15, compared to 3,485 claims made for a payable credit.

A cash sum is payable although at a lower rate for a loss-making company (14.5% rather than the full 20%), payable credits are claimed by loss-making companies which have no CT liability against which to set the deduction.

Some Businesses use “Combination” claims to offset Corporation Tax

In some cases, a SME can first use its R&D tax credit to reduce its tax bill to zero, and then take the rest as a cash payment.

In other cases, a SME with no tax bill might choose to take some or none of its R&D tax credit as cash, with the remainder being carried forward to future years to offset against corporation tax, these are referred to as “combination claims”.

SMEs doing work for Larger Companies can claim

An SME claiming will get a higher rate of relief than a large company claiming.

However, SMEs working for large companies as sub-contractors or receiving related subsidies can claim under the large company or RDEC scheme.

In 2014-15, SMEs received £70m in support from either the RDEC or Large company scheme.

Which Sectors are making claims?

The figures show a concentration of claims in the ‘Manufacturing’ (30%), ‘Professional, Scientific and Technical’ (20%) and ‘Information and Communication’ (25%) sectors

Could my company be eligible for R&D Tax Credits or R&D Expenditure Credit (RDEC)

If your business meets the following:

  • Has less than 500 employees
  • An annual turnover that does exceed €100 million
  • A balance sheet that is lower than €86 million

Then you would be classed as an SME and eligible for these benefits. A common question is “how much can my business claim?”.

What are eligible R&D qualifying costs?

HMRCs requirements are purposefully broad here for R&D qualifying costs.

If your company is taking a risk and tackling uncertainties (successfully or not) then that activity is likely eligible for relief.

If your company is:

  • Creating new products, processes or services
  • Changing or modifying existing products processes or services

If you’re not sure if what you’re doing is possible either technologically (which doesn’t just mean IT and electronics) or scientifically (okay this is a bit more specific), then you are tackling uncertainty and qualifying for R&D Tax Credits.

You don’t have to have been successful, all the thinking, designing, planning, preparing, prototyping, building, testing, breaking and fixing are activities and time expended that is a valid cost in innovating and R&D.

The materials you’ve used, the person hours you’ve burned, the sub-contractors or suppliers used, software and training you’ve needed and the space used in this endeavour are valid expenses and R&D qualifying costs.

Next Steps and the two year window

If this sounds like your business or project then you could be missing out on a payout.
HMRC allows you to retrospectively claim for the previous two years, so if you’ve recently undertaken work that qualifies then you could be entitled R&D Tax Credits.

Get in touch by email or call Richard on 07929 206 504 and I’ll be happy to help.

If you learned from this article then you might like to read R&D Tax Credits – Are you missing out? by Trevor Shields.

R&D Tax Credits – Are you missing out?

R&D Tax Credits – Are you missing out?

What Are R&D Tax Credits

  • R&D Tax Credits are a UK Government Corporation Tax relief scheme that could reduce your company’s tax bill and provide you with cash back.
  • SME’s who qualify can claim back up to 33% of their R&D costs, as cash or a Tax credit.

R&D Projects That Might Qualify For Relief

  • Your company can claim for R&D tax relief if an R&D project seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty – and not simply an advance in its own state of knowledge or capability.
  • You can also claim if you update/improve your products or services. An appreciable improvement is required.

Why Should I Bother?

At PRODDIO we find there are three main reasons why SME’s are missing out;

  • The vast majority of our SME clients have not heard of this UK Government relief scheme, in fact, neither had their accountants, resulting in missed opportunities to get much needed funds.
  • Some clients have heard of R&D Tax Credits but failed to apply because they are too busy and perceive the process as too time consuming.
  • Some SME’s are given poor advice from third parties as to whether they would qualify!

How Can We Help?

  • PRODDIO have a demonstrable 100% track record in achieving R&D Expenditure Credit and R&D Tax Credits for our clients. We have helped our combined clients benefit from Government contributions, by securing millions of pounds in additional Government funding.
  • Central to our success is our team’s experience, which includes; Innovate Grant assessors, Tax consultants (ex HMRC Tax inspectors), Chartered Engineers and Business experts.
  • Our team have over 30 years’ experience in Project Management and we hold Masters Degrees in the subject, meaning we know what R&D Projects look like and how best to maximise your claim.

r&dtestimonial


What Is The Risk?

There is NO risk to you, we operate on a no win / no fee basis and manage the whole process on your behalf.

What To learn More?

Please contact Trevor Shields, senior consultant at PRODDIO at;

Website: www.proddio.com

Email: trevor.shields@proddio.com

or call 07747512869.

HORIZON 2020 DEDICATED SME INSTRUMENT 2016-2017

HORIZON 2020 DEDICATED SME INSTRUMENT 2016-2017

Grants – 50,000 to 2,5m euro funded at 70%

What support is available?

The dedicated SME instrument’s supports close-to-market activities, with the aim to give a strong boost to breakthrough innovation. Highly innovative SMEs with a clear commercial ambition and a potential for high growth and internationalisation are the prime target.

The SME Instrument offers small and medium-sized businesses the following:

  • Business innovation grants for feasibility assessment purposes (optional phase I): EUR 50,000 (lump sum) per project (70% of total cost of the project);
  • Business innovation grants for innovation development & demonstration purposes (possible phase II): an amount in the indicative range of EUR 500,000 and 2,5 million (70% of total cost of the project as a general rule);
  • Free-of-charge business coaching (optional) in order to support and enhance the firm’s innovation capacity and help align the project to strategic business needs;
  • Access to a wide range of innovation support services and facilitated access to risk finance, to facilitate the commercial exploitation of the innovation.

Phased Support

Feasibility assessment (phase 1) – optional

Funding is available for: exploring and assessing the technical feasibility and commercial potential of a breakthrough innovation that a company wants to exploit and commercialize.

Activities funded could be: risk assessment, design or market studies, intellectual property exploration; the ultimate goal is to put a new product, service or process in the market, possibly through an innovative application of existing technologies, methodologies, or business processes.

The project should be aligned to the business strategy, helping internal growth or targeting a transnational business opportunity.

Amount of funding: lump sum of €50,000 (per project, not per participating business).

Duration: typically around 6 months

Outcome: The outcome of a phase 1 project is a feasibility study (technical and commercial), including a business plan.

Should the conclusion of the study be that the innovative concept has the potential to be developed to the level of investment readiness/market maturity, but requires additional funding in view of commercialisation, the SME can apply for Phase 2 support.

Innovation project (phase 2)

Funding is available for: innovation projects underpinned by a sound and strategic business plan (potentially elaborated and partially funded through phase 1 of the SME Instrument).

Activities funded in phase 2 can be of several types: prototyping, miniaturisation, scaling-up, design, performance verification, testing, demonstration, development of pilot lines, validation for market replication, including other activities aimed at bringing innovation to investment readiness and maturity for market take-up.

Amount of funding: in the indicative range of €500,000 – € 2.5 million or more (covering up to 70% of eligible costs, or in exceptional, specific cases up to 100%).

Duration: typically around 1 to 2 years

Outcomes:

  • a new product, process or service that is ready to face market competition;
  • a business innovation plan incorporating a detailed commercialisation strategy and a financing plan in view of market launch (e.g. on how to attract private investors, if applicable).

Commercialisation (phase 3)

With the view of facilitating the commercial exploitation of the innovation activities resulting from phase 1 or phase 2, specific activities will be proposed. These can include support for further developing investment readiness, linking with private investors and customers through brokerage activities, assistance in applying for further EU risk finance, and a range of other innovation support activities and services offered via the Enterprise Europe Network (EEN).

Coaching

Optional Innovation and Business Development Coaching is offered in parallel throughout phases 1 and 2 to help SMEs:

  •  enhance the company’s innovation capacity
  •  align the project to the identified business development strategy
  •  develop the commercial/economic impact and long term sustainability.

Coaching is provided by experienced business coaches, selected through the Enterprise Europe Network (EEN).

To find more information and apply click HERE

Thanks for reading

Travis Paxton

 

The Energy Catalyst 4 – Innovate UK is offering businesses and universities a share of up to £19 million to develop innovative solutions to global energy challenges.

The Energy Catalyst 4 – Innovate UK is offering businesses and universities a share of up to £19 million to develop innovative solutions to global energy challenges.

The Energy Catalyst

The aim of the Energy Catalyst is to speed up the best of UK innovation at all development stages. It helps businesses progress their innovations to commercial readiness.

The opportunity

Technology innovation is needed to solve the global energy sector ‘trilemma’ of:

  • low carbon
  • security of supply
  • affordability

These challenges are creating major global market opportunities. Innovative businesses in the UK can develop world-leading solutions to these challenges.

This funding competition

The fourth round of the Energy Catalyst is now open. There are 3 awards, each open to businesses, universities and research organisations:

  • early-stage award – technical feasibility
  • mid-stage awards – technology development
  • late-stage awards – pre-commercial technology validation

The competition supports innovative solutions in any technology or sector area. The proposed solutions can focus on any part of the energy trilemma.

Competition dates

  • the deadline for registration is noon on 7 September 2016
  • the competition closes at noon on 14 September 2016

To apply:

  • you can lead a proposal if you are either:
    • an SME acting on your own or working with any other with any type of organisation
    • a research organisation collaborating with a business
  • your project can last up to one year
  • the total cost of your project can be up to £300,000
  • the total non-business-partner costs must not exceed 50% of the total project costs
  • business partner funding can be up to 70% of their total project costs for small or micro SMEs, 60% for medium SMEs or 50% for larger companies

 

Link to find out more information and to apply: https://goo.gl/PcDNfY

Another great grant highlighted by PRODDIO


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£15M worth of Grants Available for UK SME’s for Innovation Projects

£15M worth of Grants Available for UK SME’s for Innovation Projects

Innovate UK is to invest up to £15 million in innovation projects in manufacturing and/or materials.

Innovate UK is to invest up to £15 million in innovation projects in manufacturing and/or materials. These projects will focus on identified technical or commercial challenges. We will fund projects that aim to lead to increased UK SME productivity, competitiveness and growth.

Projects need to be led by a business and must involve at least one SME. They can be carried out by an SME working alone or in collaboration with other organisations. Projects with costs of £100,000 or more must involve working with other partners

We are looking for projects which focus on any of the technical feasibility, industrial research or experimental development research categories.

Projects should last between 6 months and 3 years. They should range from total costs of £50,000 to £2 million.

 

Registration deadline Noon on 6 July 2016
Application deadline Noon on 13 July 2016

 

Link to find out more information and to apply: https://goo.gl/AGCAzT

Another great grant highlighted by PRODDIO

 


If you need any support in helping access this grant then please get in touch, we would be happy to help.

** Don’t forget that if you get the funds PRODDIO can also help you get further money back through the R&D Tax Credit scheme – a double win.

Thanks for reading.

Stephen Paxton

Enterprise Capital Fund – Access £100K to £5M

Enterprise Capital Fund – Access £100K to £5M

Six Pathfinder Enterprise Capital Funds (ECF) were created by the Department for Business, Innovation and Skills (BIS) (previously the DTI and BERR), following competitive bidding in 2005. Each fund invests in small and medium-sized enterprises (SMEs) seeking equity funding in the ‘equity gap’ (up to £2 million). The Dawn Capital Fund was appointed to run one of these ECFs and was initially awarded £25 million of government funding.

The Dawn Capital Fund has been created by a group of successful entrepreneurs and experienced fund managers to invest throughout the UK, with an investment focus on traditional industries where pioneering companies are able to adopt innovative technology to improve products and services.

Dawn Capital are angel and institutional investors that have collectively invested in over 100 companies. Having profitably managed significant portfolios during the recent downturn, they have experienced first-hand the difficulty that even outstanding early-stage companies face in raising start-up capital, or established companies face in raising modest amounts (sub £2 million) of development capital. They came together in 2005 to specifically address this ‘equity gap’.

Applications may be submitted at any time

 

Key Criteria

  • SMEs based in the UK are eligible to apply, or where the investment will be of benefit to the UK economy.
  • ECFs will not be permitted to invest in the following sensitive sectors for which the guidelines on state aid and risk capital do not apply:
  • Synthetic fibres and yarns.
  • Motor vehicles.
  • Steel – ECSC products.
  • Steel – non-ECSC products.
  • The production of agricultural and fisheries products listed in Annex I referred to in Article 32 of the EC Treaty.

Eligible Expenditure – Capital Projects

Restrictions to follow

  • ECFs will not be permitted to invest in the following sensitive sectors for which the guidelines on state aid and risk capital do not apply:
  • Synthetic fibres and yarns.
  • Motor vehicles.
  • Steel – ECSC products.
  • Steel – non-ECSC products.
  • The production of agricultural and fisheries products listed in Annex I referred to in Article 32 of the EC Treaty.

Application Procedure

Contact Dawn Capital for further information. Dawn Capital

 


 

If you need any support in helping access this grant then please get in touch, we would be happy to help.

  • Don’t forget that if you get the funds we can also help you get further money back through the R&D Tax Credit scheme – a double win.

Thanks for reading.

Stephen Paxton