There’s a common misconception in the construction industry that everyday activities do not count as R&D. Before working with us, our client Structural Metal Decks (SMD) were making this same mistake. The specialist steel floor and roofing contractor had claimed for years – but only when it switched to ForrestBrown did SMD harness the full power of R&D tax credits.
While £3bn a year is currently being claimed through the incentive, many businesses still don’t realise they are entitled to claim – or, they aren’t claiming as much as they could due to a lack of awareness about the full extent of their qualifying research and development.
It’s here where specialist advice can make a big difference. But even then, it’s possible for potential R&D to be underestimated. Before working with ForrestBrown, SMD had claimed R&D tax credits with a Big Four accounting firm but still wasn’t getting every penny it deserved.
How SMD qualified for R&D tax credits
SMD’s composite metal decking components are a critical part of the high-rise building construction process. The metal decks act as a form during the concrete pour. Once the concrete cures, the composite slab of metal and concrete creates a floor with superior strength, stiffness and safety.
It’s highly technical work and while SMD was already recouping some of the costs they incurred, they had found the process for making a claim arduous, as SMD’s technical director Jamie Turner explains:
“The old approach had involved us essentially writing our R&D claims report ourselves and submitting it to our advisers for review,” he explains.
“At that stage, we didn’t understand the breadth of HMRC’s definition of R&D. We were underselling ourselves in terms of the innovation we were actually doing.”
SMD’s situation is a common one. Many businesses err on the side of caution when dealing with HMRC. This caution is misplaced though, as the R&D tax credit is designed to incentivise innovation, not to curtail it.
How you can claim R&D tax credits too
Any company in any industry may be eligible, and HMRC’s definition of innovation is quite broad. The government defines R&D as ‘undertaking development activities that seek to achieve an advancement in technology.’
Crucially, this definition isn’t limited to a physical product like SMD’s composite steel/concrete decking profiles. It can be a process or a service, too. If you can clearly illustrate that your project goes beyond applying existing technologies and prove that it breaks new ground, you can claim R&D tax credits. And the R&D doesn’t have to be successful. In fact, failure actually shows an advanced degree of difficulty.
This broad definition of R&D is a good thing, designed to help more businesses claim, but it can be confusing. Many still struggle with knowing where to draw the line. That’s where a specialist R&D adviser like ForrestBrown comes in.
How to maximise your manufacturing R&D tax credit claim
When ForrestBrown begins working with a business, our first step is a detailed interview process. These initial conversations are critical as they help us understand the client’s sector and the many diverse ways in which they innovate. It’s a collaboration that goes further than just an R&D tax claim: it’s about creating a culture of R&D.
ForrestBrown interviewed us for a good few hours. They spoke to heads of departments, some of whom were clearly doing R&D projects, and some – those out on jobs for instance – for whom it was less obvious. They quickly drilled down into the detail.Jaime Turner, Technical Director at SMD
Improving R&D tax credit claims
ForrestBrown’s emphasis is on getting the details spot-on. Our specialist technical experts ensure your claim is maximised and presented to HMRC in exactly the way they like it. Our insight comes from a team that includes two former HMRC inspectors; chartered tax advisers, lawyers and accountants; sector specialists and rigorous quality assurance experts. Nobody is better placed to work on your R&D tax credit claim.
But while the technical aspects of preparing a claim have to be perfect, the ultimate goal is to create a virtuous circle of innovation. A client, like SMD, should emerge from the process with a renewed understanding of all the diverse forms R&D can take. That’s the true power of working with a specialist R&D tax credit adviser like ForrestBrown.
In our experience, steel construction and manufacturing firms are well-positioned to harness the full power of R&D tax credits. Their manufacturing R&D relates to the innovative use of steel and steel composites to overcome problems on site. This is often within the constraints unique circumstances in which only a bespoke solution will meet stringent performance standards.
Steel construction and manufacturing businesses can use R&D tax credits to meet the challenges of increasing materials costs and skills shortages. This could be a welcome boost at a time when regulation and technology continue to change the construction sector.
If you’re a construction contractor, you could be missing the full value of your R&D tax credit claim. Technology and legislation are driving change in construction and we have identified big opportunities for construction firms to receive generous tax credit payments.
If you’re a construction or manufacturing firm and want to find out more about working with ForrestBrown and the value we bring, contact us here.