Specialist Manufacturing Company – Helping them secure R&D Tax Credits in the UK
Our client is a prominent specialist machining and precision tool/parts manufacturing company. The company is well equipped with a wide range of machines for producing high quality components for, amongst others, the Motorsport/Marine Lighting Industry. They cater to customers who are leading global players in the fields of heavy engineering and earth moving tools. They work with a variety of tools and techniques including CNC Lathe Machining, CNC Milling 3 and 4 axis, Development projects, small to large batch work, Tool Room Engineering, 3D modelling and design, offline programming, conventional milling, turning & grinding.
Our client had never made R&D claims before and were led into believing that they could not claim for work performed on behalf of their customers. Although they employ highly skilled engineers and technicians they were unaware that the work performed could qualify for R&D.
They did not have a specific internal process for managing innovation across their projects and the data was not formally captured to record time on potentially qualifying R&D activities.
Invenics highlighted the potential opportunity to the client and performed a high level review of their projects and activities. Based on this we presented a brief summary outlining how it was possible for them to claim R&D tax credits, even if the work was contracted to them by other larger players in the industry. Based on this the client engaged Invenics to prepare their first ever R&D claims.
Invenics started the R&D assessment process by conducting a workshop where the client’s key technical and finance staff were invited to discuss the R&D eligibility criteria and their ongoing projects. In addition to the technical eligibility of the projects, the session focused specifically on how the contract between the client and their customers who awarded them the work would influence their R&D claims.
Following the above meetings, we helped the client understand areas where work contracted to them by their customers could be included in their R&D claim under the large company R&D scheme. We also guided them on how pieces of work funded internally (i.e. not subsidised or paid for by third party customers) could be included in their SME claim.
With our guidance and reference to the relevant legislation, the client achieved clarity around how their potential claims could work and engaged with further interest. Projects to design new physical mechanical components, enhance tolerance limits and improve efficiency were determined to be eligible as they were resolving technological uncertainties. Our technical and costing teams worked with the client to compile all the necessary supporting documents and a detailed report which was submitted to HMRC. The claim was approved within 4 weeks.
As a SME, the client has benefitted substantially from the R&D claim, providing them access to much needed cash, particularly given the Covid disruption in the previous year. They have also got a repeatable claim process setup with reference to the data being captured within the organisation. Future claims are likely to be easier to prepare with a simple and efficient data capture process we have helped them to develop.