R&D Tax Credits for Pump & Valve Manufacturers

Innovations in material technology and electronics, together with improvements to manufacturing processes has enabled the industry to develop in recent years.

The requirement for pumps, valves and actuators to reliably operate at increased pressure, temperature and/or frequency, alongside industry demand for intelligent control systems to enable better diagnostics and improved maintenance, has resulted in appreciable advances in the underlying technology.

AND, EVEN THOUGH MANUFACTURERS OF PUMPS AND VALVES ARE SPENDING STAGGERING AMOUNTS ON DEVELOPING NEW TECHNOLOGIES, VERY FEW ARE ACTUALLY CLAIMING THE HUNDREDS OF THOUSANDS OF POUNDS IN R&D TAX RELIEF THAT THEY ARE ENTITLED TO.

In the current economic climate, it's still surprising that more hydraulics engineering businesses don't explore all of the tax incentives available to help lighten the burden by either reducing tax payable and or if applicable, securing a tax repayment.

R&D tax relief

R&D tax relief is one of the government's most generous forms for tax relief. It's available to all kinds of businesses, and has proven very lucrative in the past for companies in the process & manufacturing sector. It's worth investigation too: for every £100 of qualifying R&D expenditure, relief is available for £25.00 for profit-making SMEs and £33.35 for loss-making SMEs. While for Large Companies the RDEC scheme gives relief as a taxable credit set at 13% of the qualifying R&D expenditure.

Does your business qualify?

If your business spends money in paying qualified staff to attempt to solve what at first appears to be an un-solvable problem, and as a result, you are improving a product/service, you could indeed be eligible for tax relief.

What qualified in pumps and valves technology projects?

Over the last few years, ABGI-UK has helped pumps and valves technology clients to claim for many diverse projects. The list is by no means exhaustive, but it does give you an idea of the types of work in your sector that could well be eligible or R&D tax credits.

• Improvement to the mechanical properties of components.
• Developing improved forging processes for the manufacture of critical components.
• Increasing the surface hardness of component parts.
• Development of a modular, extendible, high pressure, reverse osmosis pump.
• Appreciable improvements to the seal methodology of a concrete pump.
• Development of techniques and methodologies to reduce vibration effects in pumps.
• Improving the accuracy and reliability of a turbine, water lubricated pump test rig.
• Development of an ultra-high efficiency boiler feed pump.
• Development of a modular 12-stage motor driven reactor feed pump.
• Developing a test rig to increase operating head of subsea multiphase oil and gas pumps.
• Developing industrial control valves and test rig technology capable of simulating real world service conditions.
• Appreciable improvements to the accuracy of water hydraulic proportional valves.
• Developing improved performance high pressure water mist zone valves.

If your company is advancing technology through the resolution of technological uncertainties, then congratulations! You can claim R&D tax relief on its day-to-day costs and expenditure, including things like staff, subcontractors, materials, software and utilities.

Thing to watch out for when making a claim

One of the problems involving claims for R&D tax relief is separating the routine parts of a project from the non-routine, especially when dealing with large, high-value, complex 'first-in-class' items.

HMRC recognises that 'first-in-class' items can entail a significant level of innovation, and that the production of such an item can involve one of two R&D projects. However, HMRC doesn't expect the entire build cost of the item to qualify for R&D tax relief.

It's very important that companies identify and assess which parts of the 'first-in-class' items contribute toward eligible expenditure. That's why it's always wise to seek professional advice before undertaking a claim.

Involving specialist advisers, such as ABGI-UK, also helps you to submit your claim in the most efficient way possible, since you'll benefit from the streamlined processes and years of experience they've built up submitting thousands of R&D tax credit claims successfully.

With support from the right specialist advisers, you'll be able to:

• demonstrate which of your activities qualify under the scheme;
• open up a new revenue stream to fund further R&D projects;
• learn how to make the best use of the scheme going forward.

Don't miss out - make sure you investigate your eligibility

R&D tax credits can provide significant financial rewards to companies performing a broad range of activities. R&D tax relief can be complex and time consuming, but if you choose the most appropriate approach and adviser it can be highly worth your time, but consider your options carefully.

FOR A FREE R&D TAX CREDIT CONSULTATION AND ANALYSIS OF THE POTENTIAL RETURN YOU MIGHT EXPECT FROM YOUR PROJECTS, CONTACT THE ABGI-UK TEAM