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Could You Be Entitled To Tax Relief For Innovation?

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Rap Interiors

As Rap Interiors has often has discovered over the last 28 years, construction projects throw up a variety of challenges. Some of these challenges present conditions for which there is no established method, meaning that innovation is required to ensure the works can be completed.
Through adapting tools and techniques to overcome these problems, companies in the construction sector could be eligible for Research and Development Tax Relief. This is where RIFT, who specialise in helping companies to discover if they qualify for R&D tax relief, can help.
In this blog we speak to Sarah Collins, the Head of Research and Development at RIFT, about how companies can unlock cash from HMRC for the problem solving that they are doing.
Q&A
What is RIFT all about?
RIFT group are about 160 strong, and were set up in 1999. Jan Post started it, originally looking at travel allowances. Since then we’ve now got RIFT accounting and RIFT R&D, [the latter] of which I am the head. We look at research and development tax relief, which is to do with innovation and creating something new, or enhancing and improving something existing.
What is meant by innovation costs?
When we talk about innovation everyone looks at it and says what does innovation actually mean? For the purposes of R&D you’re looking for someone who has created something new that sets the market on fire, or someone who has enhanced an existing product.
If you’re in construction it becomes even more complicated, for example when you are on site and you come across something you’ve never seen before, such as unusual site conditions or a challenge that gets your head scratching. And at that point you can say there is innovation, because if you have to think outside the box to solve something, then that’s when we’re looking at R&D.
We’re then looking at innovation costs, that’s the cost to you, the company, of trying to overcome the challenge or hurdle of putting that new product out. And that will include your staff time internally, you’re sub-contracting costs – that’s anyone you’ve had to bring in with additional expertise, and then your material costs.
And when we’re looking at material costs, that’s costs that have been wasted and can’t be used anymore. So in terms of costs R&D HMRC talk about consumables, i.e. anything that’s been consumed and used up within the life of the project. So that’s staff time and utilities we can put in as well.What are some of your success stories?
We work across all sectors, including construction, manufacturing, engineering and software. We’ve got the local construction firm Design and Build who have received to date over a quarter of a million.
We’ve got software companies from various different backgrounds, such as IT suppliers and providers, who will go in and work with companies but equally do work on their own project as well. They can get back hundreds of thousands, depending on how big they are and how much work they put in. In fact the sector that’s claiming the most at the moment is software. I would say that at one point 50% of our clients were from that software sector.
We’ve worked with tiny manufacturers, such as someone who has created a baby carrier that turns into a secure harness for a seat. They didn’t spend a huge amount, but got back £20,000.It can range from very small claims to very large claims. I think our largest is in the automotive industry, and their last claim was against five million, and they received back just over a million.
Want to see some of RIFT’s success stories for yourself? Take a look at their case studies here. How do you go about building a claim?
The first thing we’ll do is speak to a client. We’re happy to do that over the phone. It normally takes 10-15 minutes before we can tell if it’s worth pursuing. Then we’ll then arrange a meeting, and if after one hour we’re thinking, ‘Okay, I can think of these projects and the costs were quite high’, then it’s probably worth pursuing. We can either then start the claim process then or come back. We’ll then and start to collect what we call the technical narrative, so that’s the evidence we need to demonstrate that they’re doing R&D.
Within that we’re looking at two retrospective financial years, and we’d say, ‘Let’s look at two projects per financial year, get the detail down, and then we can look at the finance as well’.
From that point there will be a bit of back and forth with the company because we’ll need to confirm that we’ve got all the technical narrative we need, but equally we then need to get the figures and numbers. Once all that is done we’ll present the company with a report that they can then approve, and then it’s a question of the accountant making the necessary amendments to their corporation tax return. And that’s when they will start to realise that money is through their taxes, and the accountant will make those amendments and send the report off.So, the whole process can be done in as little as a month. Often times it takes longer because of the back and forth. We can do it very quickly if the year end is approaching. But once it’s submitted the company will normally see the money within six weeks.How did you build your relationship with HMRC?
Because we’ve been going since 1999, the relationship with HMRC has obviously grown with us. Jan started the company, and I think very early on they had talks with HMRC, so they’ve continued those lines of communication.
RIFT have a direct line through to HMRC because of the number of calls that are made every day. We’ve developed between the R&D team a relationship with the policy advisor and the technical lead for R&D at HMRC, so we’ve got a direct email.
We also do VGTR (video games tax relief), and there’s a different department that deals with that so we’ve had lots of communication with the creatives team at HMRC, so it’s kind of developed and grown over the years, but they are an ever-present constant fixture of RIFT.To date RIFT have helped over 400 small businesses to claim back money they are entitled to. If you feel that you qualify for Research and Development tax relief, then please contact RIFT via their website.