Thanks for talking with us, Jamie. We’re hearing more now about Research and Development (R&D) tax credits than ever. What’s it all about?
Simply put, R&D tax credits are a way of rewarding your business for innovating by either reducing your Corporation Tax bill or providing a cash rebate benefit. For the food and drink industry, every time you experiment with different ingredients, flavours, production techniques or even create new recipes you are potentially doing R&D. As long as you go through a process of trial and error to overcome an uncertainty, which a competent professional in your field couldn’t easily resolve, you could qualify for the scheme.
Working with our food and drink clients I know how much, for instance, flour or hops can be wasted as they attempt to create new recipes or products, and after all that effort, they sometimes have nothing to show for it. However, thanks to the Government’s R&D tax credit scheme, which is designed to encourage innovation like this in businesses, our clients are getting up to 24.7p back for every qualifying pound they spent on R&D. In 2018 alone, Northern Irish companies received £75million back on the scheme.
Why is this relevant to businesses in the food and drink sector who are trying to get into supermarkets?
Securing key distribution outlets, like getting your item stocked on supermarket shelves and keeping it there can be the key to success. Successful producers have been able to adapt and change their business to meet new consumer demands, such as the current trend for local produce, high protein, vegan, gluten-free or alcohol-free ranges. Their products look and taste good for a longer amount of time to satisfy the supermarkets’ shelf-life demands. They’ve managed to cut their production costs and introduce efficiencies to meet the price points demanded by the major multiples. They’ve done all this by testing different ingredients, production processes, ingredient ratios and more, resulting in a product that will be more attractive to supermarkets. In turn, all this innovation could qualify them for the R&D tax credit scheme.
Are any businesses here in Northern Ireland embracing R&D particularly well?
We work with many types of food & drink companies here in Northern Ireland and beyond, so I’m always blown away by the amount of creative and inspiring home-grown innovation we have here. Our clients include coffee roasters, distilleries, ice cream producers, bakeries, butchers and even high-end restaurants to name a few – each one of them unique, but all of them innovating to stay competitive in their field and working with us to utilise the R&D tax credit incentive. One example of how innovation has helped businesses here keep up with legislation is around the sugar tax. R&D has enabled many manufacturers to discover new ways to reduce the amount of sugar in their products, while keeping taste and shelf-life intact.
What would you say to any business leaders who have thought about R&D but haven’t taken the first step?
You might be doing R&D already and you don’t even know it. There are so many innovation support avenues out there for you, so it’s worthwhile considering whether you can qualify. I’ve seen the R&D tax credit incentive being the only way some businesses can keep innovating. So, if you weren’t aware of it before now, look into it and you’ve nothing to lose in contacting Amplifi Solutions for a free initial consultation.