R&D
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Fast moving goods
One of the major points of relevance for consumer goods businesses, and FMCG in particular, is that claims can be made for not only new product development, but also process development and enhancement. Many businesses do not fully appreciate the broad range of their activities that can qualify for R&D incentives.
So, where a company needs to produce high volumes of goods quickly at low unit cost and looks to improve the effi ciency of the production process, this can involve qualifying R&D activities. Often, to determine whether such R&D has been successful, the process must be trialled at full scale, the expenditure on which can be considerable and legitimately form part of a companies’ R&D claims.
Defi ning the boundaries
Of course, this can be a complex area. Preparing R&D claims can be diffi cult as it is not always easy to identify the boundaries between R&D involving experimental manufacturing trials and ‘normal’ production. We have experience in identifying the R&D/production boundaries for different FMCG companies. We also have experience in agreeing historic R&D claims where there has been a dispute over the boundaries. Crucially too, we have been able to agree suitable repeatable methodologies in advance with HMRC as to how to identify and defi ne the boundaries, meaning that a claim is less likely to hit sticking points and delays so companies get the benefi ts quicker.
In today’s ultra competitive FMCG world where margins are so thin, goods have to be produced at ever greater speeds and effi ciencies in order to make the economics work. So even a short trial can represent signifi cant volumes of goods being produced.
As a consequence, the numbers involved in claims can be large. At KPMG, we have already assisted companies with multimillion pound claims.
THE INCENTIVE TO CLOSELY APPRAISE AND QUANTIFY YOUR R&D ACTIVITY HAS SURELY NEVER BEEN GREATER.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Rohit Patiar, Innovation Reliefs & Incentives
E:
rohit.patiar@
kpmg.co.uk T: +44 (0) 20 7694 5102
Rohit is a Tax Director and a Chartered Accountant in KPMG’s Innovation Reliefs and Incentives team with 13 years experience in the project management, delivery and agreement of R&D relief claims for a broad spectrum of clients (from large multinational organisations to small scale start ups). Rohit manages our team of multidisciplinary specialists and leads the delivery of our work with ultimate responsibility for the quality and service provided in the R&D claim process. Rohit has extensive knowledge of the R&D technical and costing issues relevant to consumer goods businesses so that they reach an optimised R&D claim position.
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