Tax Relief

Sowing innovation – with tax breaks

After the widespread rejection of the idea of ​​a new statutory, industry-wide allocation regulation, there is one way of pushing research and development projects forward by allowing companies to finance themselves – and benefit from generous tax breaks.

Kevin Bailey, ABGI’s innovation finance advisor, stated, “While access to finance can be constant challenges for industry, the HMRC research and development tax break system actively encourages farmers and agribusinesses to engage in technological innovations that bring tremendous benefits to people the economy can bring sector. So far, very few farms have taken up the program. ”

Since HMRC launched its R&D tax credit program, more than 300,000 claims have been made, resulting in a £ 33.3 billion tax break for businesses of all sizes. In the last tax year alone, there were around 60,000 F and D tax relief applications, but fewer than 100 of these were from agricultural, forestry and fishing businesses.

Mr. Bailey said, “The research and development provided by regulatory systems and industry associations that is supported by the levy is not one of the qualifying expense categories under the program. It would not be a consumable cost and a levy payment would not qualify as a qualifying payment to a subcontractor for R&D activities. However, companies that finance their own R&D activities will find that many projects are eligible for significant tax breaks. ”

As an example, ABGI highlighted the Shropshire Petals business, which grows a wide range of sustainable flower confetti and dried flowers on a fourth generation Shropshire family farm and supplies customers worldwide. For the past four years, the company has benefited from tax breaks for research and development. Director Michael Bubb said, “We grow flowers on a field scale and we want to find the most economical way to bring our products to the wedding market. The tax breaks have helped us tremendously. We are in a continuous innovation program and are constantly looking for ways to improve our mechanization and harvesting methods. So the whole process ensures that management is thinking carefully – in a logical and meaningful way that is properly documented. The additional cash flow enables us to think deeper about our business and our goals. ”

Mr Bailey stressed that there were many areas of farming activity that could qualify for tax breaks under the HMRC program, including experimenting with new forms of disease or pest control; work to achieve higher yields, such as B. Genetic manipulation of species to achieve improved robustness; Increasing the shelf life of the product; Improving the consistency of the grown product; and developing new technologies for harvesting.

In Luffness Mains, on the East Lothian coast, the Stevenson family has also successfully applied for tax breaks for research and development work on new potato varieties and plant development.

Director Allan Stevenson said, “The current market, exacerbated by the pandemic, means operating conditions are really difficult for many, and the tax break scheme has given cash flow a welcome boost to support more F and D projects in the future . ”

Mr. Bailey concluded, “Research and development tax credits can provide significant financial benefits to companies that carry out a wide range of activities. It is always wise to seek professional advice before making a claim. A specialist can compile a claim in the most efficient way by helping applicants to demonstrate which activities are covered by the system. This in turn opens up a new source of income to finance further R&D projects; and ensures that applicants learn how to get the most out of the program in the future. ”

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