R&D Tax Credits

1. R&D Tax Credits Business Solutions (Midlands) Ltd Darren Glover

2. Overview • R&D Tax Credits • Background • How to Claim • The Business Solutions way • Case Studies • Patent Box • Overview

3. Background • Government attempt to boost UK R&D • Launched in 2001 – over 74,000 claims submitted and over £7Billion of relief claimed • Under used – Only 10% of 150,000 eligible companies claiming • Companies involved in creating new / improved products or processes • Degree of novelty – not necessarily Patentable or ‘blue sky’ in lab coats!

4. What are R&D Tax Credits • What is R&D • Product development not carried out anywhere else • Innovative Process development • Software development • What is not R&D • ‘Bespoke product’ not necessarily R&D • ‘Design’ in it’s own right

5. Example Information • Employment Costs • Materials, including prototypes • Sub Contract Costs • Utilities • CT600’s & Tax Computations • Technical Report

6. Research & Development • What’s the “Technical Uncertainty” of each project? - can it be solved by a ‘competent professional’? • HMRC interested in Project Innovation and commercial benefit – leads to more tax!

7. Claim Information • Financial Spreadsheets • Technical Report • Large (500 emp, 100M Euros) v Small company schemes • Increased intervention rates!! FOR MORE INFO... Ref: CIRD documentation from HMRC – substantial volume!

8. Some Common Issues • Interpretation of Qualifying criteria • Companies often fail to recognise which costs are eligible • Changing legislation • Generation of robust documentation • Time required to bring claim together • Knowledge of the process to make a successful claim

9. Why Choose Us??? Scientists / Engineers – Not Accountants Stage by stage hand holding Our average claim is £52K compared with £43K national average Just over £1 Million reclaimed for our clients in past 12 Months 100% success rate

10. A Question… How much product would your company need to sell to generate an extra £50K in bottom line profits???

11. Case Studies • Flame cutting company, Oldbury • £178,000 • Process innovation • Strip Metal Processing Company, Birmingham • £100,000 • Product & Process innovation • Drinks dispensing company, Milton Keynes • £40,000 • Product innovation

12. Patent Box – An Overview

13. Patent Box – Aims • To create a competitive tax environment for companies to develop and exploit patents in the UK • To provide an incentive for companies to retain and commercialise patents in the UK and to develop new innovative patented products here • To encourage companies to locate high-value jobs associated with the development, manufacture and exploitation of patents in the UK • To encourage investment and growth in the UK

14. Patent Box – Aims • A reduced 10 per cent rate of corporation tax on profits attributed to patents and other similar IP from 1 April 2013 • Worldwide income from existing as well as new IP will be included. To enable this, the full benefits will be phased in over five years • UK businesses can benefit regardless of how they use their patents • In many cases the profit attributed to patents is calculated from total profits using a step-by-step method

15. Patent Box - Example • HMRC suggest that a patent on a wing mirror leads to profits on the whole car being subject to 10% tax !! • …..IP doesn’t need to cover the entire product

16. Contact Details Visit www.bsmidlands.co.uk for more information Darren Glover darren@bsmidlands.co.uk 07815 535 299