4:00 AM 18th September 2021
Saturday Essay: What You Need To Know About R&D Tax CreditsStephen McCallion – CEO of ZLX Business Solutions on all you need to know about R&D Tax Credits.
I ran international companies that specialised in robotics, which was a passion of mine at the time, these robots were developed for the food manufacturing sector, and it was here that I saw first-hand that the company was missing out on claiming for R&D. The so-called experts assigned to the claim knew so very little about engineering and not much more about how to allocate direct costs to the activities so that the claims they produced were way below what was possible. I got involved and the claim quadrupled in size. This got me thinking!
ZLX has grown rapidly, much faster than I expected it to. It was created to make SME business owners and management aware of this underutilised government scheme. The whole point of the government awarding innovation is that it is exactly what is required for continued growth of business. I had seen in a past life that this was an excellent financial aid that encourages innovation, risk taking and creative thinking.
Having a background in engineering this appealed to me and I wanted to develop the best possible company to help firstly introduce businesses to the scheme, then to manage the entire claim process in a manner that is professional throughout and minimises the time busy company executives take to prepare and make a claim.
ZLX does over 95% of the work required and manages the entire process. The company is populated by business experts from numerous arenas along with dedicated technical, engineering, and financial team experts. Together this allows for a smooth claims process that has proven to maximise a clients claim.
What are R & D tax credits?
R&D tax credits are a valuable source of cash for businesses to invest in accelerating their R&D, hiring new staff and aiding business expansion.
How to cash in on tax credits
Most businesses don't even know they qualify, it is important to find an expert that is adept at understanding and identifying the qualifying projects eligible for tax relief and in turn finding the supporting evidence for a successful HMRC claim. The government does not readily give back money unless it has a very good reason and R&D is seen as an essential tool for supporting businesses that strive to better themselves. This innovation is rewarded across the globe as it is proven that for every £1 spent many multiples are returned into the economy and the incentive makes the UK a competitive nation for business.
Running and building a business often involves simply solving problems, and using ingenuity matched with design to develop a better, more competitive, unique or customised offering.
What business owners should understand about claiming R & D tax credits?
That it is an initiative that is available for SME’s to innovate and be creative. It is little known but can really help a business to succeed. The money is there waiting, and large corporations have been benefiting from it for years whilst smaller limited companies have not claimed even though they could as they thought it was not for them.
Over 90% of businesses have been missing this valuable cash incentive for years. Over 75% of our clients were totally unaware but have all now made successful claims.
As the government keeps stating, innovation is key to post Brexit Britain’s growth. I really want to get that message across to every business owner.
Which businesses are eligible for tax credits?
Image by Gerd Altmann
To be eligible the company has to be limited in the UK and have filled at least one year’s accounts. The company does not have to have shown a profit. For companies that are more mature we can go back two years, depending on the year end date, so activities carried out a couple of years ago can be claimed for.
In just the past two years our client base has expanded to include companies from across over 40 different industries. There are many examples from businesses that sound like R&D is a part of what they do, such as pharma or engineering but we have successfully claimed for companies in many other sectors such as the live events and hospitality industries to roofing, spas, food & drink, retail, auto rental/dealers/parts/customisers and across the construction industry and their suppliers, none of which viewed what they had done as R&D, mostly they simply viewed it as business progress in way of developing systems or everyday problem solving. ZLX is in a unique position to gauge the amount of innovation and creative thinking that is currently out there, and from seeing this first-hand they are extremely positive that UK Ltd. is in the safe hands of industrious, sometimes brave, and almost always forward-thinking SME’s.
Lots of start-up companies have asked us to handle claims for them but as they are so young we cannot – until now, because ZLX has launched The ZLX Trading Academy to offer mentoring and a full future R&D audit free of charge. For new start limited businesses, The ZLX Academy offers a free of charge R&D audit to help the new business owners with their future cash flow and funding repayments whilst at the same time adding their expertise to make sure the best structure is in place to benefit from related tax efficiencies that include the specialised area of patents, that like R&D, are not understood by the majority of business owners.
We listen to the New Co management teams and formulate a forward plan that takes into account any potential future R&D reclaims and how to utilise this government initiative for maximum returns. For those new starts looking for finance, the ZLX R&D Audit shows the expected future R&D returns. Further, if investors are made aware of the fact that 20% plus of their investment could be returned through R&D claims, then this could help to reduce their risk and make investing more palatable. Our support can make the difference between success or failure.
Saving your business from Covid-19 with R&D tax claims
Image by Gerd Altmann
We have navigated several businesses and football clubs through the Covid pandemic, preventing many businesses from going under. Innovation is something the Brits are renowned for, the pandemic saw creative thinking being used to adjust to the environment that was, in reality, a whole new business world.
Moving from face-to-face meetings to video calls is just one example. Working from home required new control systems, restaurants quickly developed into becoming takeaway and delivery friendly, sports clubs had to control testing and off site, single participant, and training routines along with crowd Covid crowd controls which are still changing. ZLX has gained sizable R&D credits to reward this activity and in a number of cases the businesses are still trading purely due to this most welcome injection of cash.
Funding loan repayments
Businesses are now having to pay back government backed loans. R&D tax credits are an ideal way of funding this. The chancellor has paid out billions in loans to keep business ticking and is now beginning to ask for repayments. What better way to repay than by discovering money that you were completely unaware of, rewarded due to your past efforts in being inventive enough to navigate around the pandemic.
How much can be reclaimed?
There is no upper limit to the amount that can be reclaimed, ZLX has supported and paid out claims from £5,000 to £1 million. The only criteria is to be a UK Ltd company with at least one year’s trading.
Stephen McCallion is a robotics expert, successful businessman and serial entrepreneur looking forward to conquering the next chapter. He is the CEO of ZLX, specialists in government backed research & development tax credits, designed to reward UK Ltd companies for investing in innovation.