When this Leeds-based show design firm built a world-record-setting disco ball, they were told by their accountant that research and development (R&D) tax credits weren’t for them. The project seemed whimsical on face value – but it involved serious engineering challenges.
Not satisfied with their accountant’s assessment, NEWSUBSTANCE approached ForrestBrown for help. Our engineering experts quickly identified the R&D element of NEWSUBSTANCE’s work and worked with their engineers to put together a claim.
Working with ForrestBrown, NEWSUBSTANCE unlocked the equivalent of one new employee in R&D tax credits. In the years since, the company’s relationship with ForrestBrown has gone from strength-to-strength. They’ve used the benefit to take on bigger, bolder projects.
A disco ball is, at first glance, not a likely candidate for R&D. Then again, R&D is about more than ‘what’s new’. Of course, it is that in some cases – but R&D can also be improving an existing product, process or service.
That’s precisely what the experiential design firm NEWSUBSTANCE did when they built the world’s largest-ever disco ball for Bestival, a four-day music festival held on the Isle of Wight.
Disco balls, it won’t surprise you to hear, aren’t a new thing. If anything, the name is actually a little misleading: they actually predate disco, first becoming a popular fixture in nightclubs during the roaring 1920s, when they were called ‘mirrored balls’.
NEWSUBSTANCE is an experiential design studio based in Leeds. Their work combines architecture, engineering, performing arts and digital technology to produce show-stopping creations.
They are commissioned by high-profile global clients including governments, brands, bands and high net-worth individuals to convey their messages in powerful and unique ways. Often, this means taking on highly ambitious projects like a record-setting disco ball.
It may seem whimsical at first glance, but the project had some complex engineering issues to resolve: Hard shell or inflatable solution? How could they ensure it looked and behaved like a disco ball? How could they mitigate environmental factors like changes in air pressure and temperature?
NEWSUBTANCE experimented with different materials, sensors and construction techniques. Eventually, they cracked it and produced a record-breaking disco ball that was suspended above wide-eyed revellers on the last night of the festival.
The 10.33 metres in diameter disco ball required six people to get the ball up and going, and the ball completed the four unassisted rotations required to smash the record. Not that the record mattered for R&D, as achieving your intended outcome is not a requirement of the R&D incentive.
And yet, in an all too familiar tale, the business was told by their accountant that their work did not qualify for the government’s R&D tax incentive. “Our accountant thought it was for people in white coats, not us,” says Patrick O’Mahony, the creative director at NEWSUBSTANCE.
“Fortunately, we sought a second opinion from ForrestBrown who were able to identify significant qualifying activity.”
Find out more about engineering and R&D tax credits in our post on the subject.
NEWSUBSTANCE’s work is highly original and it’s easy for non-specialists to misunderstand how these unique projects constitute R&D. In the disco ball example, the company pushed boundaries with materials and structural engineering.
The project was undoubtedly R&D. NEWSUBSTANCE faced serious difficulties, and uncertainties plagued the project. To get around it, the company had to resolve these questions and find innovative solutions. These are all hallmarks one expects to see in an R&D tax credit claim. And if NEWSUBSTANCE hadn’t approached ForrestBrown, it could easily have lost out.
Since the disco ball project, NEWSUBSTANCE’s relationship with ForrestBrown has gone from strength to strength. The company has now made more than five claims with ForrestBrown. As their work has become bigger and bolder, so has their benefit. In 2018, the company claimed more than quadruple what it claimed in its very first R&D tax credit claim.
“What we make are not things you can buy off the shelf. They are detailed structures, things most people wouldn’t know where to start on,” Patrick says. “The tax credit allows you to fail a bit – gives a little more margin if something goes wrong and takes the pressure off our kind of project.”
See some of the ways that ForrestBrown grows your R&D claim and benefit year-on-year.
One of the trickiest aspects of the R&D tax credit regime is how broad the definition of R&D is. For the uninitiated, it can seem almost obtusely vague – but there’s a method to the madness. The definition is vague precisely so that many companies can benefit.
That means the classic people in white lab coats, yes. But it can also mean a record-setting disco ball. What is and isn’t R&D is malleable and there’s room for interpretation.
Disappointingly, it’s common for businesses who would otherwise qualify to think the incentive is not fo them. As a rule, we always suggest revisiting eligibility on a regular basis as a business’s activities and costs can change substantially from year to year.
This misunderstanding of the incentive is no slight on accountants, either. There’s a reason why over 500 accountants partner with us for specialist advice. R&D tax credits are a specialist area and they can’t be expected to know every nuance.
If you’ve been told that you don’t qualify for the incentive, it’s worth asking for a second opinion. ForrestBrown can give you a free assessment. Perhaps you don’t qualify. If you don’t, we’ll tell you upfront.
We will never take a risk with your business. But what if you do qualify? You could be missing out on a well-deserved substantial cash boost.
If you’re an engineering or design firm and want to find out more about working with ForrestBrown and the value we bring, contact us today.