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Ad Valorem

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R&D

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We are delighted to announce the introduction of local firm ECL Howard Watson Smith into the Ad Valorem Group, providing further strength to our Milton Keynes presence.

Commenting on the completion, joint Ad Valorem Group CEO, Nikki Adams said…

“This is a super addition which further underpins our already strong Milton Keynes presence. We welcome Darren, Martin, and Malcolm, along with their fantastic team and clients into the Ad Valorem family and look forward to their valuable input as we push forward in our goal of becoming the leading digital accountancy practice to the micro and SME sector.” 

We have been working with Darren, Martin, and Malcolm, along with getting to know their fantastic team over the past 6 months and it became clear very early on that our two practices share the same values and business ethos. 

ECL Howard Watson Smith partner Darren Kerins added…

“We are very pleased to join forces with Ad Valorem which will enable our clients and staff to benefit from their additional resources, expertise and digital platforms. I believe that our shared aims of providing a professional, cost-effective and forward-looking service will see the practice go from strength to strength.”

(E) enquiries@advaloremgroup.uk or (T) 01908 219100 (W) advaloremgroup.uk  

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Spring Statement 2022

Yesterday, Chancellor Rishi Sunak announced the 2022 Spring Statement, setting out the Government’s tax and spending plans. 

Please see below a few key points taken from yesterdays statement.

Key Announcements

  • Increasing the National Insurance Primary Threshold for Class 1 NICs and bringing this in line with the income tax personal allowance of £12,570 per annum, from 6 July 2022.
  • Increasing the Lower Profits Limit for Class 4 NICs from 6 July 2022 and bringing this in line with the income tax personal allowance of £12,570 per annum.
  • Self-Employed individuals with profits between the Small Profits Threshold (SMT) and the Lower Profit Limit will not pay Class 2 NICs from April 2022, while allowing individuals to be able to continue to build National Insurance credits. 
  • Employment Allowance increase by £1000 to £5000 from 6 April 2022.
  • 50% Business Rate discount for eligible businesses in the retail, hospitality and leisure sectors, from April 2022.
To read the our full Spring Statement Summary please click the link below. 

Spring Statement 2022 – Ad Valorem Summary 

If you have any questions regarding what was outlined in yesterdays announcement, please do not hesitate to contact us:

(E) enquiries@advaloremgroup.uk or (T) 01908 219100 (W) advaloremgroup.uk  

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Government announces plans for largest ever R&D budget

The government announced that the Department for Business, Energy, and Industrial Strategy’s partner organisations will receive the greatest ever research and development budget of £39.8 billion.

The £39.8 billion R&D budget for 2022-2025 will aid in the implementation of the government’s Innovation Strategy and the advancement of science technology.

  • The Business Secretary confirms how the government’s £39.8 billion R&D budget for 2022-2025, the largest ever, will be distributed among partner organisations. 
  • These allocations will support the government’s Innovation Strategy, which includes the goal of increasing total R&D investment to 2.4 percent of GDP by 2027. 

The Spending Review promised historic levels of investment in the UK’s world-leading research base over the next three years, with R&D spending scheduled to rise by £5 billion to £20 billion per year by 2024-2025, a 33 percent increase over the current parliament.

This information was provided by Gov.uk – ‘Government announces plans for largest ever R&D budget’

It is important to note that this article focuses more on R&D budgets that are mainly allocated to grant funding rather than R&D tax credits. This article shows a promising foreword to this week’s Spring Statement.

Thoughts from our Head of R&D – Alex Black:

“A really exciting time to be involved with innovation within the UK. We’re looking forward to seeing what the Chancellor has in store for us in the Spring Statement on 23 March. I and the R&D team at Ad Valorem will continue to support our clients in claiming R&D tax credits as the scheme continues to evolve.”

(E) enquiries@advaloremgroup.uk or (T) 01908 219100 (W) advaloremgroup.uk  

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Alex Black ACCA – Head of R&D

It has previously been requested and highlighted by firms and its members providing R&D Tax advice that there are a number of areas where they would appreciate clarity on the application of Professional Conduct in Relation to Taxation (PCRT) to their work. Members having any involvement with R&D Tax Credits have a responsibility to comply with the Fundamental Principles and the Standards for Tax Planning which are outlined in the PCRT and the Rulebook.

Tax advisors have a responsibility both to their clients, the professions reputation and the wider public interest. The PCRT helps to outline the standards and principles which can help to achieve this.

Many Accountants are already aware of the PCRT guidance. Many businesses however, are not as familiar with it and its fundamental principles. The 5 main principles that members of the professional body must adhere to are: integrity, objectivity, professional competence and professional behaviour.

Businesses and individuals rely on the advice and guidance from professionals and the above principles are in place to provide them against receiving bad advice. To receive advice there are 3 main areas to which the topical guidance covers:

Regulatory Expectations:

The guidance outlines those who are covered and the services. Any member of the PCRT bodies (ATT, AAT, ICAEW, ICAS, ACCA, STEP, CIOT) must follow and adhere to the PCRT guidance. This rule also applies to any advice which relates to a company’s R&D tax relief claim and must be following the PCRT guidance. Therefore any R&D tax advisor should be meeting their regulatory obligations such as GDPR compliance and anti-money laundering (AML).

Competence:

The PCRT includes that all advisors should attempt to do their absolute best to provide the best service to their clients and to get their clients claims right. Any member of the above governing bodies must be competent to provide such a specialist service (such as R&D) or they are not allowed to offer such service. The guidance highlights that R&D tax is a specialist service area and requires an in depth level of training and CPD.

Behaviour:

The principles of integrity, objectivity and professional behaviour govern the relationship between an adviser and their client. The guidance clearly outlines how advisers should behave and operate when dealing with their clients and their personal information and to not misrepresent themselves through personal brand marketing. The over arching theme here being responsible with data and transparent as an adviser in your abilities, strengths and weaknesses.

Since being introduced in 2000, R&D tax credits and the need for R&D tax advice has increased significantly as businesses continue to understand the requirements and benefits. This has opened doors for advisers to broaden their portfolio of abilities but has highlighted the need for specific knowledge on the R&D Government scheme. When taking over claims from other provides who don’t specialise in R&D tax credits, we’ve seen on a number of occasions where claims haven’t included all qualifying expenditure or understood the HMRC rules.

The PCRT has been put in place to help prevent advisers who are trying to reap the benefits themselves without actually producing a ‘good’ claim for their clients. Many advisers don’t understand the technical narrative and understanding needed to produce a successful claim and in the process of attempting to do so could prevent their clients from receiving their full funding amount.

Overall, the new PCRT guidance has helped to highlight to both advisors and clients how niche R&D actually is and how it requires a specialist team almost purposefully built who specialise solely in R&D to fully complete a success claim to its full potential.

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This week the Government have announced they are investing £20 million for ambitious companies creating new technologies to aid building resilience following the Coronavirus outbreak.

The intention behind the investment is to drive the UK forward and promote innovation post COVID-19, with the aim to help boost the countries resilience to the long-term impact of the outbreak and similar situations in the future.

As a result, grants of up to £50,000 will be available to businesses operating in the technology and research sectors who are focussed on developing new ways of working. The areas the Government are looking to focus on are improving resilience in industries that provide to the population such as delivery services, food manufacturing, retail/transport and supporting those having to stay at home during periods of self-isolation.

Examples of innovations may include:

  • Developing technologies that allow retailers to react and thrive when they experience increased consumer demand and ways to improve their national delivery.
  • More personable services for families to be able to contact and check in with elderly or vulnerable relatives. This would provide a benefit to both the family and those vulnerable as it provides peace of mind.
  • Create further tools to improve remote education, allowing teachers to teach with the correct resources adapted to remote learning.

So far the UK have seen many businesses adapt to the Coronavirus outbreak and to continue to support the population in anyway possible. This new investment will further develop the UK’s support plan in preparation for potential future events which may result in the same outcome as we have seen in the past few weeks.

Any development proposals will be reviewed as part of a competition launched by Innovate UK. All projects will begin by June 2020 and will aim to last up to 6 months allowing the products and services to be available to the public by the end of 2020.

If you believe that you could qualify for the grant please contact us to discuss your R&D project so we can fully assess the financial support and tax reliefs available.

 

enquiries@advaloremgroup.uk or 01908 219100.

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HMRC have recently released an R&D statistics report, outlining the recent figures for claims.

R&D has become a real asset to eligible companies since its introduction in 2001. Over 300,000 claims have been made with a value of around £30bn in total. The figures for this year are not yet fully complete however the figures stated in the article are indicative of a trend. See the link for the full report.

R&D Tax Credits have had a majorly positive influence on technical innovations; especially so since 2012 when the minimum investment cap of £10,000 was removed. This is evident in our region through the sheer number of claims made in London, the South-East and the East of England who accounted for 61% of claims made in the year 2017/2018. 41% of claims made in this year were also made by companies that are under ten years old.

We believe that the impressive influence of SME’s within the statistic for R&D claims is due to the increases in the SME R&D expenditure rate from 125% to 130% in 2015-16.

The number of first-time applicants has risen by 15% following the increase in expenditure rates. This is due to the efforts made to increase the incentive to make a claim and further awareness of the scheme. Despite this, the rise in claims does not necessarily correlate to increased value. For example, 9000 claims made in the year 2017/2018 equated to £20 million in costs, whereas the potential for this band could have reached £41 million (based on a claim worth no more than £5000). Although it is tangible to argue that not all claims would be worth £5000, it is reasonable to say that this difference of £21 million could be reduced with a stronger supporting document and help from a specialist R&D advisor.

Considering the areas in which we are based, and the proportion of claims made in our region, we would like to stress the importance of having a strong technical document to maximise your claiming potential. No claim is too small for us because we believe that Research and Development is essential for progression in whatever sector your business associates with and we pride ourselves on the relationships we have built and continue to build with other small businesses like ourselves.

These figures show that now is the best time to claim R&D because the government are rewarding innovation generously for legitimate claims in order to meet their expenditure targets of 2.7%. If you have been thinking about conducting a Research and Development programme or are currently doing so within your business feel free to seek professional assistance with us. See the following link to take you to our R&D website.

If you have any questions, call us on 01908 219100 or email us at: enquiries@advaloremgroup.uk