Research and Development Tax Credits - The Brewer's Tale
It may not be obvious that brewing beer would qualify for a Research & Development Tax Credits claims; however, the experimental process they undertake to develop new beers qualifies under the R&D tax credit scheme because it involves resolving scientific and technological uncertainties to create a new brewing process and product.
The growth of small and independent breweries producing craft beer and ales continues as a national trend. According to figures published late last year by accountancy firm Hacker Young, since 2012, the number has risen by 64% - breaking the 2000 barrier for the first time since 1930!
The definition of research and development in relation to R+D tax relief is very prescriptive; however, it’s not necessarily as narrow as you might think. It doesn’t just encompass “whitecoat” scientific research but extends to creating or improving processes, products or services across a broad range of disciplines and professions. The key element is that the project seeks to improve or extend existing knowledge in science or technology, whether the project is successful or not - sometimes our greatest learning comes from failure and the government recognises this.
Case Study- The Brewery
Oaktree has been working with a local microbrewery which has developed over 30 different beers since they set up. So we were sure their claim came into the definition of R+D we got to know to about the science behind the beer. For example, there are uncertainties over how to achieve the desired taste while also maintaining the right balance in colour, aroma and the pH levels, without creating sediment. There are also technical challenges to overcome when scaling up a test brew to a full batch, as the recipe can be required to change as the volume increases.
Oaktree was able to help the brewery to claim a 10K tax refund - which included a claim for beers they had created in the previous 12 months - as the backdated claim was within two years of the end of the accounting period in which they had submitted their accounts to HMRC.
The brewery said “Oaktree helped us to recognise the processes we undertake to create a new beer are applicable for R&D tax credit claims. The 10K tax refund came through in the middle of winter, which is always the hardest time of the year for our business in terms of income. The timing meant we were able to continue business without applying for loans to tie us over which is better for the business and less worry for us. We are very grateful for the support Oaktree have given us.”
Is your company eligible for R+D Tax Credits?
You may not have thought about whether your company can claim R&D tax credits and think you won’t be eligible for work already done. However, if your company has been undertaking qualifying R&D and has not yet claimed, we could help you make a backdated claim for work up to two years after submission
Things to consider
- Does my company have a project?
- Is the project in the field of science or technology?
- Would the project advance or extend the overall knowledge in the field of science or technology and not just the company’s knowledge?
- Does the project involve an uncertainty that competent professionals can’t readily resolve and where solutions aren’t common knowledge?
We have helped many companies recognise the R+D work they do as part of their business. We make it our business to get to know your business. We make no charge for our services until a claim is successful and you receive the tax credit from HMRC. But don’t just take our word for it. As a result of our work on their behalf, our clients are delighted with the financial boost tax credits give their companies and are happy to share their stories as testimonials.
If you want to check if your company is eligible to apply for R+D Tax Credits, take our quick quiz or call us on 01900 268086 or 07889 181080.
We’d be pleased to talk to you about how our strictly fixed price accountancy can help your business claim R+D tax relief so you can boost your business success.
Monday 21 May 2018