Why aren't companies in the construction sector claiming their fair share of R&D tax relief?
The latest figures from HMRC show that more than 21,865 SME claims and 4,385 Large Company/RDEC claims were made across the UK totalling £2.9billion in tax relief from HMRC.
Introduced by the UK Government in 200, 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 research and development. This money can then be used for everything from fuelling future growth to easing cashflow. It has been described as having your cake and eating it!
Many construction companies have made significant gains following successful applications to HMRC, but many more could realise returns, which can often be game-changing for smaller innovative concerns.
Recent figures from Jumpstart, the UK's leading R&D tax credit specialist show that they have so far recovered some £237k for clients n the construction sector, though their most successful construction sector application for R&D tax credits resulted in a refund of (WHO KNOWS) over four claim years.
Sounds appealing, 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.
But you have to know where to look.
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 home 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 increasing 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 combination 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 for the scheme but can't face the hassle of putting a claim together themselves. Who can blame them? Wading thought 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 wrong and under or over claiming.
Others 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 lies at the heart of a successful and robust claim.
Don't worry be happy.
The answer could be to work with an R&D tax relied expert like Jumpstart and follow the example of a roof trusses and time kit homes manufacturer we work with, whose words will ring true with many a construction business leader. "We weren't convinced that we would necessarily qualify. However, we'e had very recently developed a unique product and it was fantastic timing. After learning that we were eligible, we were definitely on board. Who would have thought there is a company out there with people who can help bring funds back in? Although there are forms to complete, the spreadsheet stimulates a supply of information which, when accompanied with Jumpstart's professional overall service and rapid response to any queries, makes an incredibly positive outcome. I would without a doubt recommend Jumpstart to others; you will not believe the possibilities it offers."
However, if you decide yo 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 got nothing to lose and everything to gain.
