Claiming tax relief
Paul Crooks of CATAX, an Agri-EPI member, explains how those in the agri-tech sector can make a claim for the Research and Development (R&D) tax relief available.
“The demands on farmers and the agri-tech sector, driven by requirements for increasing efficiency, minimising or mitigating environmental threats, reducing energy use, waste management etc are significant and are driving an enormous research and development effort within the industry. However, farmers and the agri-tech sector are missing out on hundreds of thousands of Pounds in unclaimed Research and Development (R&D) tax relief.
“We know not enough farmers and agricultural businesses are coming forward because the numbers reaching Catax’s door are dwarfed by those in other industries such as engineering and manufacturing. As one of the UK’s leading specialist tax companies, that finding is meaningful.”
Areas where R&D is most likely to be found in agriculture include:
- Development and use of new technologies and processes in farming
- Reductions in the environmental impact of the sector
- Use of data and the internet of things to aid crop or animal management
- Robotics and AI
- Monitoring, satellite imagery and remote sensing
- Increasing yield
- Improving labour productivity through robotics and machines
- Resource management
- Drone technology
- Soil management and smart irrigation.
The project doesn’t have to be successful to qualify and claims can be back-dated two years.
“Many businesses do not realise that much of what they are doing can be categorised as R&D under the government’s rules, making them eligible for the valuable tax relief that was designed to reward and encourage innovation. The HMRC criteria for genuine R&D is whether an appreciable improvement can be shown, addressing a scientific or technological uncertainty.
“Catax worked with a leading UK equipment manufacturer who wanted to develop their own range of manure spreaders and trailers and the technological uncertainty came about in meeting new mechanical, construction and design parameters to produce a new series of equipment which had increased functionality. Our twelve years of experience in specialist tax relief enabled us to identify and, importantly, maximise the qualifying costs in this innovative project and the tax benefit to the engineering business amounted to £30 000.
“Another client wanted to develop an automatic gas purging system in his potato store and a lot of work was carried out in determining the optimum location and frequency of gas sensors which linked to the automatic purging pump. The total tax saving for this business was over £60 000.
“The average tax relief benefit for farmers and agritech businesses we have worked with has amounted to £50,000 – a significant sum which could be reinvested in the business to fuel further innovation and growth. If your business profits from products you hold a patent on, then the Patent Box Tax Relief can also help retain more of those profits in your business.”
Many businesses in receipt of public grants from Innovate etc have been advised that they cannot claim R&D Tax Relief on grant aided projects. This is untrue, although the claim is processed through a different HMRC programme to the normal one available to SME businesses and can amount to a benefit of nearly 10% of the entire R&D project.
As in most disciplines, the results achieved by specialists can differ significantly from that achieved by many generalists and the same principals apply in the field of R&D Tax Relief. Most good R&D tax specialists will work on a commission basis so cost considerations can be dismissed as no fees will apply unless a significant benefit is achieved for your business.
Catax have developed a highly efficient system which maximises your tax benefit but minimises your time involvement while we collect and process the information required.
For more information, visit: www.catax.com.