MD Jason Short and the Qualvis team
Harnessing research and development tax credits and investing in innovation could unlock significant opportunities for manufacturers, as specialists at Jumpstart point out.
The increasing focus over the past few years on “innovation as a means to increased competitiveness” should be a strong force encouraging companies across the UK economy to invest their own resource, time and cash in innovation projects.
However, Sheffield City Region’s Quarterly Economic Review recently cited that, of the companies it surveyed within its area, 30% did not intend to invest in innovation projects at all over the next year.
So, with wide recognition that innovation, in most cases, is translated into increased revenue from sales of new or improved products reduced operating costs through improved productivity better operating profits and more flexible and resilient businesses, why is it that companies are still hesitant to commit even more time and money into innovation projects?
If innovation is truly fundamental to success in today’s dynamic business environment, then all companies need to invest as much as practically possible into innovation projects.
Many companies are discouraged from investing in innovation as the benefits are not always clear or obvious at the outset of the project. In such a situation, companies are often reticent to commit resources as experience has often shown that the final bill for a project grows beyond initial projections. Against uncertain or ambiguous benefits there doesn’t appear to be a compelling argument for giving time and money, both of which are limited luxuries for small and medium sized entreprises (SMEs).
As a result, innovative companies in the UK are selling themselves short, by failing to take advantage of the generous incentives available to support innovation activity, such as the research and development (R&D) tax relief scheme. If they did, they’d be able to gain benefits well beyond the improvements to their revenue and bottom line profits, and generate additional funding to boost future innovation spend.
One such company is Suffolk-based MD Controls, which has benefited from an extra £120,000 over the past six years that it has been able to reinvest in infrastructure.
Founded by engineer Martin Davies, MD Controls (MDC) has been providing turn-key engineering solutions for clients from its Bury St Edmunds headquarters since 2001. Growing to a team of 12, MDC has extensive experience of implementing fully-automated control systems for a range of industrial and agricultural environments including food services, shipping, storage and distribution.
Designing, manufacturing, installing and commissioning bespoke control systems, MDC continuously seeks new solutions for global clients. This means elements of projects can have unknown outcomes requiring R&D.
In 2011, R&D tax credit specialist Jumpstart was recommended to MDC by an accountant due to the risk-taking aspect of their business. “Initially I was sceptical about our eligibility as I thought research and development meant men in white coats,” said Davies, “however Jumpstart’s technical analysts quickly dispelled this myth and I was amazed by the size of our first claim.”
Working with Jumpstart for more than six years, the Suffolk-based company has received a total claim value in excess of £120,000, contributing to their growth through reinvesting in infrastructure such as staff and ICT. Davies also says his knowledge of the scheme allows him to take on projects with a higher risk thanks to being able to off-set the potential claim value against losses.
He adds: “Working with Jumpstart has made the process of claiming R&D tax relief quick and simple, saving me time and resource. Plus, their expert knowledge of the system means I am confident we are maximising our claim value without risking over claiming.”
It is also worth remembering that the rewards for innovation don’t just come purely from projects focused on new product development or product improvement projects. Engineering body EEF’s most recent Innovation Monitor, published in November, cited a three-fold increase in the number of process innovation projects undertaken by its members over the past seven years and added that 37% of companies surveyed believe process innovation is becoming more important than other forms of innovation.
Take Qualvis for example, a family-owned business based in Leicester that supplies companies such as Marks & Spencer, Waitrose and Tesco with quality packaging across a range of sectors – including cosmetics, multimedia, household and food. Qualvis has continued to reinvest in its facilities and processes over the years, helping it find innovative ways to stay at the forefront of design and printing in the UK.
“We weren’t aware of the full scope of the R&D tax relief scheme until Jumpstart delved into our projects and had a look at what we were doing,” says Richard Pacey, creative design director at Qualvis. “We thought innovation meant your product had to be ‘groundbreaking’ in some way, but it turns out that ourday-to-day operations were adding to the UK’s knowledge economy.”
Despite thinking everything in the print industry was now standard practice, with Jumpstart’s help, Pacey and his team were able to evaluate the entire business to identify any technical developments that may be deemed as innovative and which fell under the banner of R&D. This collaborative approach has helped change Pacey’s perception of what R&D tax relief is and the amount of effort involved on his team’s part.
On the whole, manufacturing is a vital part of the UK economy, and with so many small and medium firms contributing throughout the supply chain, across a variety of industries, it’s vital that they receive as much financial support as possible.
The UK Government’s R&D tax relief scheme is one of the biggest funding sources for innovative UK companies, but with hundreds of pages of guidance to wade through and almost as many pitfalls to avoid, it can be tough to go it alone.
Involving specialist advisors such as Jumpstart for your claim means that your claim process will be more efficient. You will benefit from the specialist’s tried and tested template and receive support from their team to guide you through any questions as you compile the claim.
With support from specialist advisors, you will be able to:
Jumpstart is a leading R&D tax relief specialist, guiding companies through the complexities of submitting claims to HM Revenue and Customs (HMRC).
Its large team of technical analysts has specific scientific and technical backgrounds and years of industrial experience that have resulted in an extremely high success rate in securing R&D tax relief for its clients. Since inception 10 years ago, it has realised almost £100m benefit for its clients. Right now, its submitting an average of 500 claims per year to HMRC.
For a free R&D tax credit consultation and analysis of the potential returns you might expect, contact the Jumpstart team on 0370 218 7751 or email@example.com