techUK Insights RSS Feed - techUK RSS feed for insights content. en Copyright (C) 2015 Is a 50% failure rate on innovation good or bad? Wed, 05 Dec 2018 07:00:00 +0000 CRM Sync The second in a series of articles aimed at helping techUK members optimise their R&D Tax Credit claims <p><strong>Iain Gray of MSC R&amp;D - techUK&rsquo;s R&amp;D Funding &amp; Commercialisation Partner</strong></p> <p>According to Cisco Europe&rsquo;s Director of Innovation, speaking at techUK&rsquo;s recent Supercharging the Digital Economy, 50% is way too low to be good!</p> <p>50% suggests a lack of risk taking and a lack of vision and drive to try and find that next big idea that will disrupt the market and transform your company&rsquo;s fortunes.</p> <p>Cisco&rsquo;s view is that the next big idea will not come from Silicon Valley &ndash; instead it will come from some small, agile and highly innovative team of people somewhere in the world &ndash; and that Cisco&rsquo;s role is to help enable these people to innovate.</p> <p>Having a success rate below 50% also means that a lot of projects have gone by the wayside &ndash; but that is not to say that these unsuccessful projects don&rsquo;t qualify for <a href="" target="_blank">R&amp;D Tax Relief</a>, a mistake a number of companies make when calculating their R&amp;D Tax Credit claims.</p> <p>Work that fails because you could not develop a workable technological solution or because the technological answer could not be produced in a cost-effective way may still count as R&amp;D.</p> <p>R&amp;D is work done to achieve a scientific or technological advance through the resolution of scientific or technological uncertainty.</p> <p>Sometimes that can be obvious, but the definition for relief purposes can be quite broad in its application. It can include:</p> <p>&nbsp;</p> <ul><li>&nbsp;achieving an increase in overall scientific or technological knowledge or capability</li> <li>&nbsp;significantly improving products, processes, materials or services through scientific or technological development.</li> <li>&nbsp;using science or technology to duplicate the effect of an existing product or process in a new or appreciably improved way.</li> </ul><p>&nbsp;</p> <p>The identification of R&amp;D for claims is based on the definition set out in the BIS R&amp;D Guidelines issued by the Department for Business, Energy &amp; Industrial Strategy. This complicated rule base sets out the basic concepts, gives examples and defines R&amp;D for tax purposes.</p> <p>But the words do not necessarily fit neatly to an actual R&amp;D project in a business context &ndash; so they must be interpreted in the light of the facts on the ground.</p> <p>This is a real skill and where an advisor, if they have the appropriate technical expertise, can be very helpful, correctly identifying the qualifying R&amp;D projects, and their limits.</p> <p>MSC R&amp;D have been providing our clients with the highest quality R&amp;D Tax Relief service on a 100% contingency fee basis since the scheme&rsquo;s inception. We match our technical analysts to the technology of our clients to ensure no eligible R&amp;D is missed.</p> <p><a href="" target="_blank"></a></p> <p><a href="" target="_blank"></a>.&nbsp;</p> <p>&nbsp;</p>Contact: <a href=""></a> Do you qualify for R&D tax credits? Fri, 23 Nov 2018 12:55:48 +0000 CRM Sync Not sure whether you qualify for R&D Tax Credits? – this extract from MSC R&D’s Guide to R&D Tax Relief might help you. <p>This is the first in a series of insights explaining R&amp;D tax credits and looking how your business may potentially be eligible, and what to do next. Iain Gray of MSC R&amp;D - techUK&rsquo;s R&amp;D Funding &amp; Commercialisation Partner</p> <p><strong>Introduction</strong></p> <p>The UK Government&rsquo;s R&amp;D Tax Credit scheme encourages and rewards both SMEs and large companies for investing in innovation. It offers a vital means to cut costs and improve cash flow, whilst remaining ahead of the competition.</p> <p>Over 26,000 claims were made in 2015-2016 &ndash; an increase of 19% over 2014-15.</p> <p>The total value of claims rose to &pound;2.9bn (a 20% increase).</p> <p>The scheme is complex and requires detailed knowledge and understanding in order to take full advantage of it. Consequently, most companies either don&rsquo;t claim or under claim. Or, worse still, over claim with no justifiable evidence in the case of an audit by HMRC.</p> <p><strong>Can You Qualify for R&amp;D Tax Credits?</strong></p> <p>Although knowledge of the relief is spreading, many eligible companies still do not claim. This is often because companies don&rsquo;t understand the scope of what R&amp;D projects are eligible and, therefore, don&rsquo;t feel that what they are doing qualifies. This lack of understanding is preventing companies from benefitting from the schemes and losing out on potentially tens, if not hundreds of thousands of pounds of valid R&amp;D Tax Relief.</p> <p><strong>If your business is a UK limited company and, in the past two years, you can answer yes to one or more <strong>of the following questions, then you could well be eligible:</strong></strong></p> <ul><li>Have you manufactured or developed new/existing products, devices, systems?</li> <li>Have you developed or improved any software, in house?</li> <li>Have you developed bespoke new products for clients which involved you undertaking R&amp;D?</li> <li>Have you made efficiency improvements to any of your processes?</li> <li>Has there been a requirement to change your processes, products, systems, technical devices or services because of legislation changes?</li> </ul><p>Other companies may be worried that a poorly constructed or supported claim may lead to trouble with HMRC. This is where a specialist in claim preparation can provide the necessary reassurance that your work qualifies and that the right expenses have been claimed.</p> <p><strong>R&amp;D Tax Credits Explained</strong></p> <p>The R&amp;D Tax Credit scheme was introduced by the government for SMEs in 2000 and extended to Large Companies in 2002. Any company developing new products, technology or processes may be eligible.</p> <p>It is a tax relief scheme, designed as an incentive for companies developing new technology &ndash; the more qualifying development work a company does, the greater the relief it can get from its Corporation Tax bill. Even loss-making companies can benefit (in terms of a &ldquo;Credit&rdquo;) which can be of particular importance to early stage businesses.</p> <p><strong>The scheme is one of the most attractive in the world and a company can claim retrospectively for up <strong>to two previous accounting years.</strong></strong></p> <p>The benefits to a company vary according to the level and cost of development undertaken, whether it is an SME or a Large Company, and its Corporation Tax, but it is not unusual for expenditure to run into hundreds of thousands of pounds, <strong>with tax relief typically in excess of &pound;30,000 </strong>being realised.</p> <p><strong>How R&amp;D Tax Relief Works</strong></p> <p>If a company incurs qualifying expenditure (in categories such as staff costs) on R&amp;D, it can enjoy an extra deduction from its taxable profits, so its corporation tax bill will be reduced. If the tax has already been paid, then a refund will be received from HMRC.</p> <p><strong>For SMEs </strong>the rate of enhanced deduction is currently an extra 130% &ndash; meaning a cash saving of 24.7% of the eligible R&amp;D cost (assuming the tax rate to be 19%). Not all SMEs (and particularly early stage start-ups) will have taxable profit, so an extra deduction from taxable profits would not be of immediate use to them. Instead, loss making SMEs can convert their losses (attributable to qualifying R&amp;D spend) to cash, at a rate that currently amounts to approximately 33% of their qualifying spend on R&amp;D.</p> <p>These reliefs for SMEs are very valuable and can provide cash at a critical stage to support the continuing R&amp;D effort.</p> <p><strong>For Large Companies</strong>, the <strong>R&amp;D Expenditure Credit (RDEC) </strong>provides a cash payment (taxable) of 12% of the qualifying R&amp;D expenditure instead of a deduction from taxable profits. This credit is available even if the company has no other taxable profits.</p> <p><strong>Is Your Company a Small or Medium Enterprise?</strong></p> <p>To qualify for the more generous SME relief your company has to have less than 500 employees and either have annual turnover not exceeding 100m Euros, or have total balance sheet assets not exceeding 86m Euros.</p> <p>In arriving at staff, balance sheet and turnover numbers for your business you have to include:</p> <ul><li>the total figures for any linked enterprise (you would test for these in a similar way to deciding if your accounts need to be consolidated), and;</li> <li>an appropriate proportion of the numbers for any enterprise that owns 25% or more of your company&rsquo;s capital or voting rights, and;</li> <li>an appropriate proportion of the numbers for any enterprise that your company owns 25% or more of the capital or voting rights for.</li> </ul><p>The precise definitions of linked and partnership enterprises are based on a modified European Community definition which also includes certain exceptions. To establish whether you are entitled to claim under the SME relief regime, or have to claim under the less generous RDEC regime for larger companies, we recommend you get specialist assistance, as this can be a complicated area. (N.B) The definition of a SME will have to be kept under review as the Brexit process unfolds.</p> <p><strong>The Rules of R&amp;D Tax Credits</strong></p> <p>Of course there are rules. The expenditure has to be on qualifying R&amp;D, in line with a published definition. This definition is a broad-based one that goes well beyond blue sky R&amp;D and includes technological and software development up until the technological problems have been solved, and you have something which only requires minor adjustments before it can be used or commercially released. The expenditure on this R&amp;D then has to be checked to make sure it is revenue in nature (rather than capital), and meets rules covering what expenditure qualifies: so for example there are special rules concerning subsidised or subcontracted expenditure, and rules defining what expenditure falls into eligible categories.</p> <p><strong>The meaning of R&amp;D </strong>in the context of R&amp;D Tax Credits is not straightforward and wider than most companies realise. It is not limited to the R&amp;D department. <strong>HMRC defines R&amp;D as work that achieves a scientific or technological advance when scientific or <strong>technological uncertainty exists.</strong></strong></p> <p>This can include:</p> <ul><li>achieving an increase in overall scientific or technological knowledge or capability;</li> <li>significantly improving products, processes, materials or services through scientific or technological development;</li> <li>using science or technology to duplicate the effect of an existing product or process in a new or appreciably improved way.</li> </ul><p>The whole project may not qualify, only the element addressing the technological uncertainty. This is not always easy to identify, but can include planning and managerial activities in some instances. <strong>With software R&amp;D</strong>, where development is ongoing, identifying the areas of technological uncertainty in projects is critical, as many more routine activities will not qualify. Software R&amp;D can cover a very large part of the development process from testing suitable data sources and filtering techniques through to &ldquo;fit for purpose&rdquo; testing of a scaled-up prototype. However, identifying this in a way acceptable to HMRC is a skill developed over numerous claims.</p> <p><strong>How to Claim the R&amp;D Tax Reliefs</strong></p> <p>Generally speaking, you have two years from the end of an accounting period to claim the R&amp;D relief for expenditure deducted in that period. A company can prepare and submit its own claims. However, that means they have to understand how the R&amp;D definition is applied in practice, master the detail of what expenditure qualifies under the rules, and also understand how to present this so HMRC understand it and are satisfied by it. The alternative is for you to do what you do best &ndash; develop the technology and run your company &ndash; and to use a <strong>specialist like MSC R&amp;D to prepare the claim for you; most companies choose this route.</strong></p> <p>Look out for our follow up Insight, looking at just exactly what R&amp;D is.</p> <p>If you would like a copy of MSC R&amp;D&rsquo;s Tax Credit Guide, please email <u></u></p> <p><a href=""><u></u></a></p>Contact: <a href=""></a> Making the Case for Govtech SMEs Tue, 02 Jan 2018 14:44:46 +0000 Simona Paliulyte(techUK) SME survey findings will help improve access to the public sector market <p><img src="images/assets/Fotolia_124568856_Subscription_Monthly_XL.jpg" alt="Fotolia 124568856 Subscription Monthly XL" /></p> <p>To better understand the views of SMEs operating in the public sector tech market, techUK undertakes an annual survey to capture their experiences. The key findings of the 2017 survey of nearly 140 GovTech SMEs include:</p> <p>• 90% did not think that civil servant buyers have a good understanding of how SMEs can meet their needs (a 4% improvement on the previous year)</p> <p>• 95% supported the government’s 33% target of awarding central government procurement spend to SMEs and a majority of respondents viewed the G- cloud framework as being useful for SMEs to access the public sector market</p> <p>• 95% stated that government should be doing more to improve the SME experience as part of the supply chain route to selling into the public sector</p> <p>The findings highlight the urgent need to improve engagement between the industry and government earlier in the commissioning process to expose civil servants to the innovative technology that’s available in a fast moving market. Throughout 2018 techUK will be working with the Cabinet Office and government departments on a range of activities to improve access the public sector tech market, including a series of market engagement events to help SMEs gain business with government.</p> <p>techUK will be launching a report on ‘Procuring the Smarter State: key steps to promote innovation and growth in the public sector’ on 30 January 2017. This report will provide further analysis on the SME survey and outline key recommendations to promote innovation in the public sector, and help dynamic British based SMEs to scale and grow.</p> <p><strong>Further Information</strong></p> <p><a href="">The Future of Public Sector ICT Procurement</a></p> <p><a href="">Making the Case for GovTech SMEs</a></p> Defence Industrial Policy Refresh Thu, 21 Dec 2017 09:00:00 +0000 Andy Johnston (techUK) techUK's initial views on the Refreshed Defence Industrial Policy released at the end of 2017. <p>techUK welcomes the Government’s Defence Industrial Policy Refresh (DIPR) released in mid-December 2017.</p> <p>The DIPR is the UK Government’s primary policy document concerning how MOD contracts for services and equipment, and how it plans to work with industry to deliver national capabilities. The DIPR sets out to clarify a number of procurement and commercial elements of Defence policy that greatly affect UK industry. Affecting everything from research &amp; development activities, and requirements setting, through to support to exports and intellectual property rights, the DIPR is a broad document that will demand much work to implement in 2018.</p> <p>MOD’s commitment to ‘Competition and Strategic Choice as the best means of delivering value for money, increasing innovation, and opportunities for SMEs’ is welcomed by techUK, indeed our members welcome competition and the chance to justify the efficacy of their products and services. techUK encourages MOD to pair this approach with a commitment to sustaining a level and fair environment in which to compete. As explored below there are elements of UK defence procurement that persist from previous years that reinforce outdated ways of working and make it hard for new entrants to compete with incumbent suppliers.</p> <p><strong>Commercial Transformation</strong></p> <p>The importance of commercial transformation with UK Defence cannot be understated, especially when placed in the context of engagement with the digital industries. The digital transformation led by ISS has progressed over recent years and has been coupled with a new approach commercial activities in Corsham too. As the Cabinet Office directives encourage shorter and more agile agreements for ICT services ISS has attempted to break down monolithic contracts intro smaller groupings of services. This approach should favour SMEs, offering them routes into MOD that were previously held by the traditional suppliers. Although there is evidence of this, it is widely known that progress here has been slow. techUK members are keen to support this transformation and to embrace modern ways of contracting for digital products and services. In 2018 we look forward to working with Andrew Forzani, MOD’s new Chief Commercial Officer, and the yet to be appointed Commercial Director at ISS.</p> <p><strong>The Digital Industries</strong></p> <p>techUK is somewhat disappointed to see that much of the references to digital platforms and information systems within the document is restricted only to industrial engagement purposes. Throughout the document ‘industry’ is described as broad groupings of capabilities, offerings, service providers, and innovators. As the Defence industry becomes ever more diverse this is very much welcomed and commended. However, there is no reference to the intricacies of the digital industries and the potential of such companies to revolutionise the public sector. As this is a broad policy document covering a multitude of areas this omission is understandable, however techUK will continue to work with MOD officials in order to ensure this message is communicated.</p> <p>techUK greatly welcomes the direct use of the Land Open System Architecture (LOSA) example within the document. LOSA is a good example of how the UK can lead on the development of open systems and create innovative commercial mechanisms. LOSA allows UK SMEs to be directly involved with an important and influential project, whilst maintaining full control and rights over their intellectual property, traditionally a tough challenge when dealing with open systems. techUK encourages MOD to maintain this approach to opportunities that allow UK SMEs to engage in collaborative discovery work. For work such as this it is critical that MOD identifies and defines the user-side demand, ensuring that the results of LOSA have a customer and an end-user, eliminating the Valley of Death.</p> <p><strong>Collection of Industry Data</strong></p> <p>As part of the Government’s prosperity agenda MOD will increase the frequency and rigour with which they collect information about UK Defence jobs, supply chain depth, and contribution to economic prosperity. The collection and utilisation of this kind of information should greatly support the extant efforts being made to show the economic value of Defence to the UK economy. However, it is important that the processes being established in order to collect this information are not overly arduous on industry. UK companies already provide much information to different government departments, and efforts should be made to discover and use the information already within MOD’s reach, then make sensible efforts to collect what else is needed.</p> <p>techUK would also suggest that the information that is being collected should also be at a level of granularity that makes it multi-purpose and useful for other purposes. To give an example; the collection of information on high-skilled technical roles within Defence would be used to demonstrate how Defence provides and maintains a number of high-value roles within the UK shores. Alongside this efforts should also be made to collect information on skills gaps in these areas. What jobs cannot be filled, what skills gaps are growing, and what can Govt. do to assist industry with this situation? The collection of data for the purpose of making positive statements about Defence and the industry that supports it is a worthwhile endeavour, and efforts should be made to ensure that this activity helps address as many of Defence’s challenges as possible. This activity is a good opportunity to increase efficiency and effectiveness in industrial engagement.</p> <p>The progress of the joint industry-MOD discussions on Intellectual Property Rights (IPR) are of vital importance to techUK members. At the time of writing the DEFCON currently being worked through by industry and MOD applies to more traditional equipment and services. However, following the completion of this work the next task in the process will be a DEFCON covering digital products and services, and contracts dealing with data-driven assets. The outcome of the primary DEFCON will heavily influence the approach made to the digitally-focussed DEFCON. techUK looks forward to engaging further on this work and will continue to urge MOD to take a sensible and future-leaning approach to IPR, recognising the huge investments that the private sector makes in order to develop innovative IP. techUK members develop products and services for a wide range of public sector customers; adequate protection of IPR is a major factor when looking for business; MOD has a real opportunity to appeal to innovative companies with a modern approach to IPR.</p> <p><strong>SME Policy</strong></p> <p>An important part of MOD transformation, both commercial and wider, in recent years has been the SME policy and Defence’s cultural approach to working with the UK’s smaller sized contractors. This has been a major point of interest for techUK since it was launched in 2015, and continues to be of importance for our members looking for business with the MOD. Overall techUK members have been disappointed with the pace at which the various activities within the SME Policy have been progressed since its launch. Elements such as the Supply Chain Advocate Network have struggled to gain traction within the Department and around the Commands, offering only limited opportunities for business.</p> <p>The DIPR shift towards early engagement and a simpler requirements setting process both favour SMEs, indeed many of the practical changes noted in the document would increase MOD’s ability to contract directly with SMEs. It is important for MOD to work with industry when forming these new engagement mechanisms, in fact it may be more important that MOD work with non-Defence contractors in order to understand how to appeal to potential new entrants.</p> <p>Transparency and visibility of opportunities is tackled directly in the DIPR paper; with the Twitter account @defenceproc and the new Supplier Portal ( being the two new primary engagement routes. techUK welcomes the technologically enabled nature of these additions and will work to share awareness within our community. However, DIPR does not address an important part of SME and new entrant engagement that overshadows these kinds of changes. The access that is afforded to incumbents across Defence is a huge bonus when searching for new business opportunities. Across the public sector the temptation for customers to ‘stick to those they know’ is undoubtedly strong, and unfortunately Defence is no different. Incumbent suppliers have the advantage of having physical presence on the floorplates of MOD sites, as well as relationships with civil servants. In some situations and contracts this is preferable for all, including national security considerations. However, this culture does stifle the SME agenda and makes it hard for SMEs to feel they can compete on a level playing field. techUK implores MOD to ensure the Supplier Portal is treated as the definitive place to post contracts, and that (as much as is possible) contracts are released to industry concurrently across all sites and platforms. UK SMEs welcome competition and the chance to prove their products and services are the best available, Government has an obligation to ensure the playing field is as level as possible.</p> <p>techUK members also look forward to assisting MOD with the development of the ‘supply chain plans’ for contracts worth more than £100 million. With increasingly effective cyber-attacks and economic uncertainty given the Brexit negotiations the resilience and health of the UK Defence supply chain is more important than ever before. Efforts to better understand and monitor the supply chain should be matched with initiatives from MOD, wider Government, and the prime contractors to support SMEs if they do encounter trouble.</p> <p>As noted in the DIPR techUK would greatly welcome a closer relationship with MOD in order to improve the guidance on engaging with potential suppliers and making more use of digital platforms. Digital ways of working are of particular importance and can be very powerful when working with SMEs outside of the traditional Defence localities around the UK (London and the South-West).</p> <p><strong>Final Thoughts</strong></p> <p>The DIPR is largely a collection of policies and activities that MOD and wider Government have publically stated previously. This consistency and stability is welcomed by industry; indeed policies that encourage competition and drive opportunities for new entrants are ideally suited for the fast-paced nature of the digital industries. However, it is the deployment of these policies that will be of pivotal importance. DIPR has allocated a number of tasks to MOD and to industry to fulfil in the coming months; there are a number of initiatives that require industrial input and support, and there are extant processes that require resolution. 2017 was a year that challenged the way that MOD distributed responsibilities, funds, and resources – arguably this affected the ability for officials to enact policies such as those noted in this DIPR. techUK looks forward to working with MOD on all the issues noted above, the digital industries are growing in their experience of affecting public sector markets and vastly improving the efficiency and effectiveness of traditional suppliers and customers.</p> <p>&nbsp;</p> <p>So, what will techUK be doing to support the implementation of the DIPR? The bullet points below are techUK’s primary DIPR issues:</p> <p><strong>· Digital Transformation</strong><br />- techUK will continue to encourage MOD to develop more digital ways of working, and in particular, digital industry engagement mechanisms. We will continue to push for an approach to industrial engagement that engages directly with the digital industries and makes allowances for the intricacies of how our industry operates.<br />- techUK will continue to encourage the Front Line Commands to consider digital capabilities when setting all future equipment and service requirements.&nbsp;</p> <p><strong>· SME Policy</strong><br />- We will engage directly with MOD and Minister Defence Procurement through the Defence Supplier’s Forum SME Forum to monitor the progress of the changes. techUK will offer support to the Supply Chain Advocates in order to help grow their profile as well as their knowledge of the digital industries.<br />- techUK will also survey members who use the Supplier Portal and feedback their thoughts to MOD on its ease of use and efficacy in helping them discover new opportunities.</p> <p><strong>· Commercial Transformation</strong><br />- techUK will support MOD with the development of standard contracting templates and the move to shorter and more agile contracts.<br />- Working directly with ISS techUK will offer industry support to shape information systems and services contracts in such a way that delivery and value for money are prioritised and innovation is encouraged.</p> <p><strong>· Defending the UK defence enterprise</strong><br />- techUK will continue to support and promote the CES+ and DCPP initiatives by extolling the importance of appropriate cyber security measures to all our members and partners.<br />- We will offer direct support to MOD in their activities to discover more information about the UK defence supply chain, including offering industry views on what data can be most readily collected and what will require more time or resources to collect and analyse.</p> <p><strong>· Support to Exports</strong><br />techUK will continue to work with MOD and DIT in order to provide UK companies, particularly SMEs, with opportunities in international markets. This will require techUK to engage with stakeholders and industry about a shift to support smaller opportunities within target markets. Recognising that not all SMEs can be supported directly by Govt. but that they may well be a minimum expectation from industry as to the support and expertise that they can access from the civil service.</p> <p><strong>· Intellectual Property Rights</strong><br />techUK will continue to work with MOD and ADS to complete the current work on IPR, prioritising the interests of industry who develop and utilise IP as a core part of their business. We then look forward to deeply engaging on the forthcoming DEFCON expected to address digital services and products later in the year.</p>