In September 2017 HMRC released the annual statistics on the uptake of R&D tax reliefs. As well as showing an increasing number of claimants, the data is notable for demonstrating that manufacturing is far and away the industry with the highest concentration of R&D tax relief claims, with 28% of the total amount claimed going to innovative manufacturers.
Shorts’ Innovation Taxes Group (ITG) work with many manufacturing and engineering companies in the Sheffield City Region, helping them access this valuable relief. In our experience, claims in this area broadly fall into two types, either product or process development and can arise due to a number of factors. Examples include customers requesting a ‘tweak’ to an existing product, there being new environmental or regulatory restrictions or maybe a company needs to make cost savings in its production process. In this article we have outlined some examples of successful claims we have worked on in the manufacturing and engineering sectors.
Goods transportation solutions
There are increasing demands for goods to be transported in a more efficient manner – this can be driven by the need to reduce costs and also the changing nature of UK supermarkets, with the move to smaller in-town stores. Innovation in this area to dramatically increase the capacity of goods transporters and the associated required adaptions to distribution centres has led to successful R&D tax relief claims.
Automotive seating
The automotive industry is highly regulated from a health and safety perspective. In addition, manufacturers face restrictions in terms of cost and finish, the latter being particularly important at the higher end of the market. These issues lead to R&D to develop new methods of, for example, retaining the seat safely within the shell of the vehicle, or to ensure that new seat designs integrate fully with an existing vehicle.
Printing
Environmental regulations are pushing the market away from traditional ink supplies into water based inks. R&D is undertaken in this area to ensure that the replacement product gives the same high quality result, but without the environmental cost.
Specialist machining
We have seen a number of R&D claims which relate to developments in machining. One example arose from the difficulties in machining a super alloy, destined for use in hostile environments, whose superior mechanical properties made it very difficult to machine due its high strength and machine resistance.
Security in dangerous environments
Traditional fob/alarm based security entrance and exit arrangements are not suitable for all environments, for example, highly explosive areas. R&D was necessary to develop a new method of ensuring security access in these areas.
The above are just a few examples of the claims we encounter with our clients in the manufacturing sector. There are many other examples, in both this and other sectors. If you wish to discuss whether R&D tax reliefs might be available to your company, please get in touch. to arrange you free consultation
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