TMB Patterns, a UK manufacturer of thermoforming tools for the plastics packaging industry, shares its experience of using research and development tax relief consultancy, Leyton, to help maximise the benefits available from this government policy.
Many manufacturing companies overlook the day to day activities that qualify for R&D tax relief. The conventional ideas of blue sky thinking and cutting edge technology cloud our view and we are quick to dismiss the idea of investigating qualifying activities – attempts to overcome technological uncertainty – in more detail. This can lead to missed or poorly optimised opportunities for receiving tax relief.
What TMB Patterns has demonstrated however, is that in every stage of the manufacturing process, activities can qualify as R&D.
Product design, from the brainstorm and initial concept development stage, to detailed design to meet particular specifications can be seen as a technological uncertainty, as well as using or integrating new materials. Prototype validation to ensure the achievement of certain standards or regulations is another relevant uncertainty in the product development cycle.
In many cases the technological uncertainties can continue into the mass production phases when the automation and integration of the process isn’t always straightforward. Often, when introducing more than one machine into a process, difficulties arise and resolving them can lead to eligibility.
Such processes can include the introduction of software, and not necessarily just bespoke packages. If an off-the-shelf product needs to be adapted for a particular need this can also be investigated. Whenever Leyton looks to identify whether a company qualifies for the R&D tax relief scheme it always looks for an incident that forced staff to challenge how something was being used or had to think about how to improve it.
Martin Baker, MD at TMB Patterns, says: “One of the best things about involving Leyton in our claim was that the whole administration headache was taken out of the process. They quickly identified what qualified as R&D and what didn’t and drew up all the reports on our behalf.
“We were able to focus on our core business and take advantage of the R&D tax relief without any stress,” he continues. “As our work is contracted by clients, what we can claim for was dependent on who our client was and the contractual relationship we had with them. Leyton’s understanding of the legislation was clear cut and they really simplified our internal record gathering so that in following years the whole process has been completely straightforward.”
Wen Zheng, Leyton’s manufacturing consultant, says that companies are often driven by client requests and keeping up with the market and that this should be looked to as an indicator of technological uncertainties, or R&D. “Just because a client has contracted you to do the work doesn’t mean you can’t claim,” she says. “So many manufacturing companies aren’t claiming and for TMB Patterns we were able to deliver significant value which meant a big difference for that company. I would really encourage all manufacturing companies to reassess their eligibility to make sure they aren’t missing out.”