£112,000 windfall from R&D tax relief

Our client is an owner-managed business involved in the manufacture and supply of quality, bespoke, precision turned parts and machined components. The company has grown from incorporation in 1982 to a position where it now employs 95 people and has an annual turnover in excess of £12million.

The company had not previously considered preparing an R&D Tax Relief claim as they did not consider that its activities would qualify for the relief. The client needed an understanding of the extent to which the companies activities were eligible and the potential benefit they could realise.

As part of the manufacturing process, our client is often provided with blue prints of the component required to be manufactured. They then invest considerable time in designing the best way to manufacture these items so as to keep unit prices down. The challenge not only comes from the need to innovate production methods but also the quest to use newer or cheaper materials without adversely affecting the quality of the final machined component.

In addition, during the period in question, the company undertook a significant project to reorganise the production area moving the machines from being hardwired into a network to a wireless network. This was done with a view to increasing flexibility of the workshop and allowing changes to factory layout to be undertaken with the minimum of machine downtime.

Jackson Stephen conducted an initial appraisal with the company’s key technical managers to discuss various projects undertaken over a two-year period. A number of projects were identified where the company had clearly found innovative solutions to a manufacturing problem or had sought to increase efficiency of the manufacturing process.

Once qualifying projects had been identified, we then worked with the company’s finance team to determine the costs incurred by the company in completing these projects.

From this information and our discussions with technical staff, Jackson Stephen compiled a report setting out the nature of the companies R&D activities, the benefits to the company and how the activities met the various qualifying conditions for the relief.

The initial claim covered a 24-month period and resulted in a tax repayment to our client of £112k.

Going forward claims are expected to generate circa £50k tax refunds per annum.

 

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