Case Study
A complex FTSE100 business which specialises in software development
Business Pains
There was a lack of resources to develop and implement an internal programme for accurately assessing the large number of both discrete, and interconnected, software development projects across the business.
The client had investigated the potential for an R&D Tax claim previously, concluding that there was little or no R&D being done so there was minimal appetite for engaging a third party for this work.
An internal form-based reporting system for identifying and assessing projects was not desirable because it would consume significant internal resources to manage and upskill the people to assess the R&D work.
The Chief Technology Officer, a passionate evangelist for technology within the business, felt that the innovative R&D being carried out was not being recognised. He didn't want to do an RDEC claim unless there would be a material benefit for his Department with minimal impact on day-to-day operations.
Premise
MMP's engineers carried out a training workshop with the technology department heads.
Our delivery process was introduced to senior members of the development team and follow-up discussions carried out. This set the tone for engaging with the wider technical teams as the department heads were happy with our approach and asked their teams to find time to discuss their projects with us. This cascading series of interviews was completed in short, focused sessions. Each discussion started with an overview of the RDEC eligibility criteria ensuring the focus was on eligible projects and activities.
The consultants moved seamlessly throughout the technology and development teams, consulting with, interviewing and identifying R&D throughout a number of different development departments. MMP's team did this largely autonomously at the client's request, with regular updates. This kept the tax and finance teams up to date with progress as the service delivery progressed.
The MMP finance team, carried out a line-by-line analysis of the expenditure and compiled the RDEC calculation. The technical consultants then wrote and collated a detailed R&D Tax Relief report.
During the interviews, MMP identified that the company was ramping up expenditure on contract staff for one of its key development projects. MMP explained the various options to maximise the amount that could be included under the RDEC scheme, such as employing more R&D staff or using contractors for specific projects.
Proof
As a result of MMP's work, the company successfully claimed their eligible R&D projects under the RDEC regime, and the work conducted by the technologists and developers has been recognised for the complex advanced R&D work they conduct.
The CTO was very impressed with the description and detailing of the technology written up by the MMP consultants in the R&D tax relief report. As a result of this work, the CTO feels that there is now a better understanding of innovation throughout the business and has presented extracts of the report to the board.
The technical leads become more familiar with the process and eligibility criteria and as a result the technology interviews have become more efficient. The cascading interview process ensures that MMP gets a robust view of a wide range of projects being undertaken across the business, every year.
MMP prepared a position paper regarding the various types of contractual relationships and their eligibility under the RDEC scheme; specifically focusing on externally provided workers (EPW). The paper detailed the positive impact on eligible costs if working arrangements and associated contracts could be aligned with the requirements of the RDEC scheme.
The review and recommendations of this work resulted in a substantial increase in eligible costs.
The RDEC is now allocated to the Department budgets each year. This direct financial benefit has resulted in widespread support for our work. The client has continued to renew their engagement and has even engaged MMP at other group companies.
Lack of resources? Tax and technical teams always short of time and experience to accurately assess R&D?
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“Thank you - An amazing piece of work as ever. Very detailed, but clear, concise and reads really well. The numbers look pretty good as well! ”
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