roundtable: manufacturing & engineering 45


Knight revealed that his company TSL had just received a welcome £150,000 R&D tax credit. Capturing and categorising everything that applied looked set to be a slow process so TSL outsourced the paperwork. “They kept pressing us to check the application and we were often too busy ‘in meetings’. I feel silly now and wish I’d taken the time to assist them – after all, that’s good money”


Needham: “We sometimes don’t hear the good stories. There’s a lot of misinformation out there.”


King’s MHA McIntyre Hudson colleague Kate Arnott added: “The first reaction of most clients seems to be that Patent Box and even R&D tax relief won’t apply to them, or it will be a hassle looking into, and then probably won’t benefit them. But, we have often been able to prove them wrong. Plainly, for whatever reason, they are not being educated well enough about these reliefs.”


Needham urged manufacturers to set time aside to properly review such matters, but added: “I think the onus is on the tax and support services sectors to help business people, show them how to do it, and demonstrate the advantageous steps that can be taken.”


King called for a concerted effort from those supporting Thames Valley businesses, perhaps through local LEPS, to create more awareness and understanding of such opportunities, so that “the light-bulb comes on.”


Julian Knight


Meechan acknowledged this, while praising MAS and Pera Consulting (Melton Mowbray), for their local business support in dealing with applications. He felt much of the paperwork was EU-generated and called for simpler, quicker applications processing. “I understand that wheels have to grind, legals have to be checked, but it would be nice if it happened more smoothly with one email rather than 50.”


Harrington pointed out that Bucks Business First (BBF) could also assist with accessing grants and government funding “We want businesses to be focusing on productivity and making cash. We want to take away some of that administrative burden and help create opportunities.”


A patently obvious benefit?


King stressed that the Patent Box scheme can be a beneficial tax relief for companies developing new products – but it is often misunderstood and hence currently undersubscribed.


The Patent Box scheme, with its reduced rate of corporation tax on profits earned on certain patented innovations, gave most companies a valuable level of protection for their patented products while providing a bottom-line cash benefit. But, Patent Box might not suit companies that felt they needed to keep their product details secret.


King mentioned that several large multinational corporates were already finding the UK 10% Patent Box rate attractive and foreign-owned entities were also involving their UK subsidiaries in the scheme. He pointed out that Patent Box could have wide tax relief opportunities for innovative companies.


“It’s not just for big businesses. This is a good thing for all businesses, since many product innovations and improvements can come under Patent Box, so people should get into it.”


THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2014


Harrington agreed, but pointed out that along with awareness, businesses needed to be convinced that they qualified and that the benefits were achievable. “Knowing up front what the prize is will help, but companies will also need assistance because taxes are unforgivingly complicated.”


R&D tax relief rates and capital allowances were currently very favourable for investing companies, King advised. “So the message is spend out now,” Murray summed up.


Are workplace pensions impacting on growth?


Ercol already had a pension contribution scheme in place, said Garratt, so the cost impact was not significant, but the administrative challenge had been costly in man-hours. “Whoever designed this auto-enrolment system needs congratulating on thinking up something so complex,” he added ironically.


Arnott said many businesses were only just coming to grips with the task, and now contacting MHA McIntyre Hudson for advice and practical help, not least because they are running out of time. (Auto-enrolment comes into force at different staging dates up to 2018, based on the size of the employer’s PAYE scheme at April 1, 2012. The largest employers began auto-enrolment in 2012.)


Arnott’s tax colleague King was disparaging about auto-enrolment’s complexity and its sliding deadline system.


By the end of 2015, he predicted “… the whole scheme could fall down because there may not be enough IFAs to deal with it. There are already some issues with firms trying to get in now, and delays are occurring. With a huge increase in the numbers of businesses reaching their staging dates over the next two years, I see some real problems on the horizon without some major changes.”


Arnott: “Some pension providers are already turning away from smaller companies.”


King: “Our view is that it has got to be done,


www.businessmag.co.uk Continued overleaf ...


Richard Meechan


Jones quoted Commission on Employment and Skills figures revealing 146,000 current job vacancies in the manufacturing sector. “We are struggling to fill them, so there is obviously a big issue on skilling up.” He also highlighted skills lost through retirement, with the average age of skilled engineers currently being over 55.


Garratt mentioned that Ercol, to help tackle the furniture industry skills shortage, had this year taken on apprentices “for the first time in a very long time.”


In the past two years, with Ercol experiencing growth, it had filled its skills gap by taking on skilled employees from Poland. “They are very good, but it brings challenges such as language barriers, integration and training.”


but how can we advise clients to minimise their costs (in time, resource and cash).”


Not enough businesses are addressing the task, he warned. “To many it’s just an unfortunate problem for the future, but it will be a very serious issue in about a year’s time. There is a danger it could be a car crash without prior planning.”


Skills: the problems of attaining, training and retaining


A skills deficit was mentioned earlier as a potential growth threat, Murray reminded the Roundtable. “Is it serious?”


Garratt agreed with Meechan who said the biggest difficulty was finding “warmed-up graduates” aged 25-30 who had relevant working experience. “We scoured the High Wycombe area for an engineering graduate – mid to late 20s, with previous product development experience – and it was disappointing in the extreme.” Graduates at his Chalfont St. Peter company currently travel from Reading and Hammersmith. “It’s not a struggle we can’t overcome, but we are short locally of higher-tech, qualified, prospective junior managers.”


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