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Why construction companies are losing out on R&D tax credits payouts
Why aren't companies in the construction sector claiming their fair share of R&D tax relief?
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Latest figures from HMRC show that more than 45,045 SME claims and 7,285 RDEC claims were made across the UK totalling £4.4bn in tax relief.
Introduced by the UK Government in 2000, the R&D tax relief scheme is designed to encourage innovation and global competitiveness by allowing companies to reclaim some of the money invested in qualifying R&D.
THIS MONEY CAN THEN BE USED FOR EVERYTHING FROM FUELLING FUTURE GROWTH TO EASING CASHFLOW.
Many construction companies have made significant gains following successful application to HMRC, but many more could realise returns, which can often by game-changing for smaller innovative concerns.
So why do so few construction companies make claims?
By far the biggest reason is the belief that they are not eligible because they do not carry out R&D however, this is in fact a wrong assumption. R&D can be found in a huge range of innovative engineering and materials companies which support the construction industry in the UK, including manufacturers of concrete, damp proof coursing, tanking, steelwork, render systems, insulation systems, cladding panels, glazing, fixings, glues and paints and more.
What's eligible in construction projects?
All of these products have to meet specific technical performance requirements and also comply with constantly changing legislation.
Other areas of possible eligibility are in the construction and trialling of prototype homes that are more energy efficient and produce less CO2, especially to meet ever-stricter standards.
Other activities that make companies eligible for R&D tax credits include the durability and/or the lifespan of materials that protect the exterior of a building, enhancing the stability of products, for example, to reduce sun bleaching, improving the energy efficiency of systems used within a building, and developing alternative production or construction techniques to reduce the environmental impact of construction projects.
Developing more effective techniques for removing contaminants from land, or finding ways to remove new combinations of waste chemicals, as well as new construction techniques to create buildings that are more resistant to earthquakes, storms, and other acts of nature are all activities which meet the eligibility criteria for R&D tax credits.
Too much hassle?
Many companies are aware of their eligibility but can't face the hassle of putting a claim together themselves. Who can blame them? Wading through HMRC's 500 pages of complex definitions and criteria is time consuming and difficult enough, compounded by putting the claim together and the risk of getting it wrong and under or over claiming.
Other will have recognised their eligibility but found that the returns fell below their expectations. This is because, although accountants are important in the R&D tax relief process, they are not R&D tax relief specialists and therefore often concentrate too much on the financial side of the claim, forgetting about the technology that lie at the heart of a successful and robust claim.
What are companies in your sector saying?
The answer could be to work with an R&D tax relief expert like ABGI-UK and follow the example of Severn Partnership, a leading provider of Surveying, Building Information Modelling and Visualisation services for infrastructure, whose words will ring true with many construction business leaders.
"Before talking to ABGI-UK we didn't realised we could claim tax relief on failed R&D projects. This is encouraging us to execute even more innovative ideas, knowing that we can make a claim." says MD Mark Combes.
"We would recommend ABGI-UK to other businesses. They are a professional organisation with experienced, well trained and qualified people who know ho to convert your R&D into a tax credit claim making your future more sustainable."
HOWEVER YOU DECIDE TO PROCEED, WHETHER GOING IT ALONE OR WITH THE HELPING HAND OF A SPECIALIST, BE SURE TO GIVE R&D TAX RELIEF A SECOND THOUGHT. BECAUSE YOU'VE NOTHING TO LOSE AND EVERYTHING TO GAIN.
How can ABGI help you?
You want the biggest return for the least possible effort, this means that you need a service provider that can minimise your time, risk and complexity but also maximise the accuracy and value of your claim.
ABGI is one of the world's leading tax incentive and innovation management advisers. With a 30+ year heritage and 200 experts & advisers we manage +£1 billion of global tax incentives annually for a broad range of clients including some of the world's best-known brands.
Our aim is to help clients accelerate and fund their innovations. We operate on the entire value chain of innovation through our multidisciplinary international teams.
We specialise in helping companies who are looking to optimise their claim, experience a better service or pay a more competitive price - this leads to maximised, robust and defendable claims, reducing risks, time and effort for you.
FOR A FREE R&D TAX CREDIT CONSULTATION AND ANALYSIS OF THE POTENTIAL RETURN YOU MIGHT EXPECT FROM YOUR PROJECTS, CONTACT THE ABGI-UK TEAM
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