Construction Breakfast – July 2017
Construction sector ‘problem solving’ eligibility for R & D Tax Relief
We expect a lot of SMEs and medium-sized businesses in the construction sector are unaware that R&D tax relief is available to them. Unlike problem solving, Research & Development is not considered to be something construction professionals do on site. However, this week’s Gregg Latchams Construction Breakfast speaker, Claire Knight, highlighted the mindset shift required to regard on the job ‘problem solving’ as valuable R & D, and an expense which can be claimed back from HMRC. In fact, construction is one of the biggest industry areas eligible for R&D tax relief but is often missed due to this language barrier.
With challenges in the economy, funding drying up, and a rocky road ahead with Brexit, the times are demanding we do more with less. Here is an opportunity where your innovative business solutions in construction can be rewarded.
In the construction sector, ‘problem solving’ solutions on the job, now better understood as R & D, are typically characterised by material science or better working methodologies and use of IT. Claire explained that eligibility for R&D tax relief in the construction sector is defined by new systematic approaches, new scientific or technological knowledge advancement (which is not in the public domain), and overcoming scientific or technological uncertainty (challenges/problems). Areas in construction where this could crop up could be in the sustainable building sector, working in restricted or contaminated areas, acoustic and thermal performances, and different and new technology uses e.g. back office systems.
Going into further detail, Claire talked through R&D tax expense claims which can be made on the types of materials used, staff costs, how much time is spent on the problem solving, software use, energy usage, wastage, prototypes, and subcontractor costs.
There are two different schemes set up depending on the size of your business, with 26-33% tax reductions for SMEs and 8.8-11% for larger companies.
Accountancy practices such as Moore Stephens UK, where Claire Knight is based, that offer services in the construction sector employ trained engineers. They understand common construction problems, assess which projects qualify, and assist with creating a written report to HMRC stating your claim.
Here are some different examples of companies who have made substantial savings via this R&D tax relief scheme:
- A construction company came up with a method to control water seepage and secured an R&D tax refund of 120K.
- A scaffolding company who specially designed a scaffolding system to handle the crowds at the Olympics successfully claimed a 50K return
- A software developer claimed R&D tax refunds of 750k for new software development
- A demolition company got a 250k return for working in contaminated buildings and on space restricted sites
- An architect company working with complex design, with novel material use in its every day work claimed a 50K R&D tax refund
After her challenging and inspiring talk, Claire took questions from the floor, providing guests with further insight on how these issues could affect specific scenarios.
There were over 60 attendees to this month’s event, and all attendees were able to network and gather great contacts for their construction work within Bristol. Gregg Latchams loves interacting with the networks within Bristol, and their legal expertise is an excellent foundation for many. Our next construction breakfast will not take place until after the summer, so keep an eye out for the details!
Keep up to date with industry news and events (including our monthly Construction Breakfasts!) by subscribing to our newsletter or mailing list, following us on twitter, or keeping an eye on our events page.