During the first year of the R&D Tax Credit Scheme, a little over 1,000 claims were made in the UK. By the time the books were closed on the most recent tax year (April 2018) that number had risen to fractionally under 50,000. To put that into context, that is one claim every 10 minutes for every day of the year.
Why the sharp increase?
“Companies are more aware of the scheme and the rate of benefit has increased over the years,” says Demetrios Kyriacou ACA, senior financial consultant at Leyton UK. “The incentives to make companies claim the benefit has only ever gone up. Undoubtedly, CFOs are more aware of what they can claim for compared to 18 years ago. There are simply more costs and more projects to look at when making a claim.”
HMRC says: “The increase in the number of SME claims in recent years is likely to reflect the effect of changes made to the SME scheme from April 2012 onwards. There have also been increases in the SME enhanced expenditure rate, including a rise from 125% to 130% in 2015-16. These changes, together with an increase in the SME payable tax credit rate from 11% in 2012-13 to 14.5% in 2014-15, have made the scheme more attractive.”
But regardless of the changes, companies have become more anxious to benefit as much from the scheme as possible, notably looking to optimise their claim process. “Becoming more R&D tax efficient helps businesses immensely,” says Mark Rodmell BSc, senior software consultant with Leyton UK for six years. “It aids sound financial planning for companies wishing to maximise cash flow”.
Best in class
Leyton UK makes roughly 7% of the UK’s claims and is principally focused of claims which have values of more than £20,000. “For us the most important element is to make the claim process efficient and robust,” says Leyton’s head of consulting Radeep Mathew. “Our team of 70 consultants from their respective technical and financial backgrounds follow a best in class methodology which enhances revenue, reduces time and importantly risk.”
So what does best practice look like?
Naseef Al-Mustafa, MEng from University of Warwick, and former engineer of Jaguar Land Rover, says: “The level of project management involved in a claim is something which really differentiates Leyton from other firms and their respective processes. The time invested into a claim from a client’s side is minimal compared to level of value they receive once the process is finished.”
One client said: “Leyton were very proactive in their approach. Even when we were slow at our responses, Leyton kept following up with us to keep the ball rolling.”
“We wouldn’t have completed the claim without them,” they added.
Andreea Staicu, financial consultant at Leyton UK, says: “It’s very much a Leyton-led approach. We guide our clients through the process every step of the way.”
Another client said: “It would have been a minefield on our own and Leyton filled us with confidence when other providers hadn’t.”
Looking at the less obvious R&D projects
“Leyton’s role in assessing R&D related projects extends far beyond the direct technical work,” says Oliver Durkin, BSc another one of Leyton’s software consultants. “Other firms reject a lot of projects because they don’t have the technical expertise in-house.”
“We had a fintech client which had rejected nearly £1.4m in unclaimed R&D revenue,” he adds. “We shed light on the uncertain aspects of R&D.”
A CEO of a tech start-up which recently completed their R&D claim with Leyton UK said: “I just couldn’t believe how much they got back for us. I honestly didn’t realise how much we were missing.”
It meant the company, that recently had issues with short-term capital requirements, could get through the next six months without raising any further debt finance.
Ultimately what Leyton with 21 years’ experience has over everyone is a considerable work force of qualified and experienced financial, technical consultants.
Radeep Mathew, who has worked with the UK office for over eight years and seen the business grow from a ten-man operation to over 200 across three offices (London, Glasgow, Manchester), says: “The level of expertise, and experience across this team is second to none.”
One large engineering firm said: “The consultants had an extensive knowledge and application, which really shone through throughout the process.”