Using R&D Tax Credits to Drive Innovation Without Risk
Published 14 December 2020
When you think of research and development, a graduation attire company doesn’t immediately spring to mind. But if, the Managing Director of this firm, hadn’t asked Recoup to help them put in an R&D claim, they would have missed out on over £25,000 in tax credits.
Below is a prime example of how we help companies not typically associated with R&D leverage this exciting scheme. Read on to find out more about research & development and innovation and how the keen experimenter, this firm, worked with Recoup to claim R&D tax relief, helping the business drive innovation in its industry.
A bit about the firm?
The firm is a specialist in occasion, performance and ceremony attire and supplies. Fresh out of university, the Managing Director launched the company to improve the graduation experience.
In the graduation attire industry, there are only five incumbents including this firms. Most have been around for two or three hundred years. Their practices haven’t changed – graduations sixty years ago look the same today.
A new player in the field, this firm seeks to change this by listening to what modern graduates really want – a more personal approach that harnesses technology and sustainable practices without breaking the bank.
Industry pioneers
The team are avid experimenters. The company searches for problems in its industry around accessibility, personalisation and sustainability, conducting many little experiments to find new solutions.
For example, the firm recently designed new asset management software for the radio-frequency identifying (RFID) chip. The company installs these chips into its graduation robes, changing “shapeless black sacks into unique assets”.
Using the asset management software, the firm can identify how many times a gown has been used, who wore it last and how quickly it’s depreciating. It also helps with supply management, detailing how many garments are in the warehouse and how many have been checked out.
Minimising risk
Our client hadn’t entertained the idea of claiming R&D tax relief until the UK entered its first lockdown. He seized the opportunity to reflect on the business and direction. He wanted to continue focusing on technological innovations that solved major industry challenges. But he was aware that every experiment was a risk; there were no guarantees for a return on investment.
He saw R&D tax relief as a potential solution to this problem. If the business could be rewarded for simply investing in research and development, it would ease a lot of pressure.
But, having never put in a claim before, he had major concerns: Was the business eligible? Would the claims process be difficult? Would it be worth his time? Can you claim R&D for innovation?
He decided to discuss the matter with an R&D tax specialist. Recoup stood out as an expert in its industry, so the director got in touch with the team in May. Within an hour of his enquiry, Recoup responded.
An eye-opening conversation
In the directors onboarding call with Recoup, he explained the firms’ story so far. Through this narrative alone, a Business Development Manager (BDM) at Recoup – was able to identify the specific reasons why the firm qualified for R&D tax credits. And then Recoup BDM asked a critical question:
“What other experiments have you done recently?”
Our client revealed that the firm was also using the RFID chips to create a new service for its customers. When a student visits the the firms photography studio or accepts their certificate on stage, the images are sent to their online account. No waiting. They get to relive these incredible moments instantaneously.
The director of the firm also discovered that the technological solutions they were developing now – such as a virtual graduation platform for students during lockdown – would help the business qualify for R&D credits in the future.
“It was inspiring,” explains our client. “I came away from the call feeling like I could keep pushing forward, be ambitious and bring change to the industry faster than I thought possible.”
Working with Recoup was a “no-brainer”
After the onboarding call, our client knew he wanted to work with Recoup: “They were four steps ahead of the other R&D tax specialists I contacted. It was a no-brainer.”
The next stage involved a discussion with one of Recoup’s chartered tax advisors to gather the information needed to maximise the claim. Our BDM advised the client on the information required for the call, such as project costs and outlines.
After the call, Recoup handled the entire claims process. “I would get regular updates,” says the client, “and whenever I felt like checking in, the BDM would get straight back to me. I always felt like a valued client – the BDM was always friendly and seemed genuinely interested in me and my business.”
Tripling the clients expectations
Our client thought Recoup would net him around five to ten thousand pounds in R&D tax credits. So when the claim was finalised in August, he was shocked to find that Recoup had secured the business just over £25,000, tripling his expectations.
“The end benefit was huge,” he said. “It’s exciting to think that our future experiments could qualify for R&D tax credits, even if they aren’t successful in the market. It takes away the risk, giving us free rein to try new things.”
Looking towards the future
There’s no question – our client will be using Recoup again to claim R&D tax relief. A huge part of why was his overall positive experience, as he puts it:
“Recoup launches straight into action, getting things done efficiently without eating into your time. You don’t have to worry about the process, there’s nothing complicated or difficult about it. From beginning to end, there were never any bumps in the road. Recoup makes it all unbelievably simple.”