Businesses must be able to adapt to ever-evolving consumer habits to grow and succeed. Take the plant-based revolution as an example.
The rise of veganism hit the headlines this year when it was revealed that a record 500,000 people had signed up to the Veganuary challenge - double the amount of people who signed up in January 2019.
The UK market for meat substitutes (being seen as healthier and more sustainable food choices) is already worth over £420 million, making it the largest in Europe. And food is not the only area experiencing incredible growth; the vegan beauty and clothing industries are on the rise as well.
UK companies in every sector are now aware the potential of the plant based market and are conducting cutting edge R&D to produce producing high-quality plant-based products that meet current consumer demands.
Whether you are developing a new vegetarian or vegan product, are engaged in product improvement to address changes in legislation and regulations, or are creating customised products to meet consumer expectations, the UK Government wants to help you succeed and make sure you continue innovating.
Reduce your tax bill or get a cash credit
R&D tax credit opportunities are available to help finance your vegan Research and Development efforts.
Introduced by the UK Government in 2000, the R&D tax relief scheme is designed to innovation and global competitiveness by allowing companies to reclaim some of the money invested in qualifying research and development. R&D tax credits are generally considered to be one of the most attractive tax reliefs available, often resulting in significant cash repayments from HMRC. R&D Tax Relief applies to both profit making companies paying also loss-making companies who are not, both are able to claim for eligible activities.
Can YOU claim?
If you company spends money trying to improve a product or service through a technological advance, using qualified staff and where there’s doubt about the project’s success, then you will most likely be eligible.
The simplest way to finding out whether you may be eligible to claim is asking yourself some questions like:
- Have we developed new tools, products or services using technology?
- Have we tried to improve our existing products through technical changes?
- At the start of a project, did we ever think ‘I’m not sure of the best way to do this’?
The costs that are eligible for relief are:
- STAFF COSTS – the majority of innovation is undertaken by people and as a result
the largest element of most companies’ R&D expenditure is the cost of staff involved
in, and managing these processes.
- MATERIALS – Companies can claim for items that are used up in the process of R&D,
such as chemicals, materials, batteries and certain forms of tooling.
- SOFTWARE – Any software required to assist in resolving a technical challenge, or
in verifying that a challenge has been successfully resolved, or an advance was
indeed achieved, will attract relief against the cost of acquisition. Be careful however
not to claim relief against training staff to use the software! That’s a “No, No” for
HMRC, as staff should already be competent in using the software.
The following kinds of activities are eligible for R&D relief:
- Elimination of allergens and food additives.
- Extending shelf life of goods or establishing extended shelf life in new products
- Product development for specialist dietary requirements (low salt, sugar etc.)
- Complying and adapting to new legislation
- Resolving technical problems with production processes (e.g. Seasonal variation
- Problems caused with variation in raw material quality, specification or strength
- Improving the environmental impact: e.g. Reducing material usage, waste,
emissions, and energy consumption.
- Making the manufacturing process faster, more efficient, and safer through
improvements to the underlying technology or the integration of components, machinery and / or processes.
- Issues associated with scalability (e.g. Increasing from ‘one-off’ prototype to large
If you can answer 'Yes' to most of these questions then, based on our experience across thousands of clients, it looks like you could have a successful claim:
- Have you developed new tools, products or services using technology?
- Have you tried to improve your existing products through technical changes?
- Have you had to resolve technical problems with any of your products?
- Have you found more efficient ways to produce your products or services?
- Have you experimented with new equipment or production techniques?
- At the start of a project, did you ever think 'I'm not sure of the best way to do this'?
- Have any of your projects failed for technical reasons?
Case Study – Beauty
A company specialising in the formulation, development, production and distribution of cosmetics, undertook a project to re-formulate several of its existing products in order to classify them as vegan whilst maintaining the required properties and aesthetic.
It was technologically uncertain whether the company could remove non-vegan reagents from its products and replace them with alternatives enabling the products to be classified as vegan whilst maintaining the shelf life, aesthetics and stability of the original.
As a result of this research project, they received over £93,000 in R&D tax relief.
Case Study – Food Manufacturing
A long-standing client of ours specialises in the development of cereals and meat substitutes, engaging in R&D to improve the nutritional benefits of its food ingredients.
It can be extremely difficult to achieve a suitable texture in a meat analogue product, due to the insufficient binding of the ingredients. The company identified a unique combination of vegetable proteins that provided a significantly advanced vegan base formulation from which to develop burgers, sausages and hot dogs. The company experimented with varying levels of added proteins, gels and starches as well as with reaction of the proteins to temperatures, cooking times, mixing and shearing speeds, and settlement times.
They have so far received £405,571 in R&D tax relief.
Case Study – Fashion
A company specialising in the design, manufacture and online sale of footwear and accessories, attempted to duplicate the effect of animal leather to achieve the same aesthetic appeal of animal leather or other unsustainable material through the development of a product made from vegan AND environmentally friendly constituents.
The company investigated a variety of sustainable materials, created prototypes with iterative improvements to each, and gained knowledge with regards to the availability of sustainable, vegan materials, but also their limitations with regards to durability and stability.
How can you claim?
There are a number of ways that you can claim for R&D tax relief. The accountant route is often assumed to be the logical choice because it is a tax process. The great majority of accountants are not technical and will not understand what you do, how you do it, the context of your projects and known industry alternatives.
Even though in principle, it sounds simple enough, it’s very important for a business to be able to clearly define the advances they were hoping to achieve, as well as the uncertainties they faced along the way. If they don’t, their claim could be rejected, they could lose thousands in relief, face the inconvenience of an HMRC enquiry or the pain of substantial penalties.
This is why there is value is speaking to an adviser who speaks both your language and HMRC’s, who can clearly communicate on your behalf the aims of the R&D work you have undertaken, and the challenges you have faced in the process, and ensure you receive the biggest return for the least possible effort.