VIEWPOINT
CREDIT WHERE IT’S DUE FOR MERCHANTS
Dominic Bartholdi, head of business development at R&D tax credit professionals GovGrant, looks at how merchants could be missing out on up to £70,000.
BUILDERS MERCHANTS in the UK could be missing out on tax credits worth £70,000. Evidence suggests that more awareness is needed of the range of applications for R&D tax credits in the UK merchanting sector. With HMRC data revealing that the sector made up 0.9% of UK R&D tax credit claims, those operating in the industry are encouraged to consider whether they might be eligible.
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service or process for the better. It can even be applied for to make tax savings on innovation that has failed. There is a considerable amount of R&D surrounding builders merchants.
For those that did make a claim from the sector, the average value of a claim was £70,588 in 2017-18.
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What is R&D tax credit for builders merchants? In the UK, companies are able to claim tax relief for their R&D activity. The schemes for SMEs and larger companies are both administered by HMRC. Typically SMEs get back up to 33% of the amount they’ve spent on qualifying R&D. Large companies could get more than 10% of their R&D spending refunded. According to HMRC, to get
R&D relief, you need to create a new product, service or process, or change an existing product,
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A typical claim in the supply chain sector could include: • Internal stock management • Real time and JIT (just in time) distribution and warehousing • More efficient and environmental routing • API (application programming interface) linkage to carriers and suppliers
All the above areas require state-of-the-art solutions to be developed from the ground up – the kind that cannot be bought ‘off the shelf’. Additionally, in many cases businesses are using outdated legacy systems and infrastructures which need bringing up to date. Amid increasing pressure on the supply chain sector to improve efficiency, meet environmental targets and streamline
communications, many logistics or supply chain companies are simply unaware that they are carrying out compliant R&D activities.
Why the builders merchants are missing out on savings We find that companies from all sectors have the potential to claim UK R&D tax relief. For tax purposes the definition of R&D is very broad.
We know that supply chain businesses of all kinds are benefitting from innovative technology which is constantly streamlining their processes and allowing them to work more efficiently at greater scale. R&D claims can come from all types of improvement, however small, and we see this happening in all aspects of the logistics industry. It’s not just a case of companies being unaware of R&D tax credits. In some cases they may already be claiming, but not have explored the full potential of that claim. For example, AnyVan, an online delivery, removals and transport marketplace founded in 2009, identified the opportunity for savings on their innovation through R&D tax credits with the help of GovGrant. A full review of a previous two-year R&D tax credit claim, which had been performed by
another specialist company, helped to identify major areas of qualifying expenditure that had been overlooked. With the correct technical and financial data in place, the uplift claim resulted in new benefits for AnyVan in addition to what they had already received.
What qualifies as expenditure? By nature, logistics and supply chain is an industry with innovation at its heart. Companies are always trying to find new ways to make transportation of goods more efficient, profitable and sustainable, whether via simple changes to working practices or major new technological developments. Keeping drivers in the loop safely while they are on the road, and ensuring that all opportunities for business are taken advantage of
Examples of qualifying expenditure include
• New and innovative ways of being more efficient • Maximising the use of vehicles to better consolidate multiple deliveries • Using GPRS to assist in finding routes which are more fuel efficient and allow for multiple drops • Vehicle tracking systems to accurately position and locate vehicles and ensure that route times and driver times are lowered • Ways to ensure vehicles are in the right place at the right time, including for the start of the next day • Integrating companies’ own systems with those of their suppliers, customers and/or other hauliers to increase efficiency for replenishment • New automated systems for more accurate business reporting and analysis • Management of internal stock movement to ensure that goods are shipped in and out based on FIFO (first in first out)
www.buildersmerchantsjournal.net May 2021
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