Research and development tax relief holds so much potential for the manufacturing and engineering sector but navigating the complex claim process is best left to the professionals.
CBTax, based in Northamptonshire, is a specialist R&D tax consultancy and one that understands how important it is that those who guide clients through the process are not simply financial experts, but bring real-world expertise.
At the heart of the CBTax approach is the understanding that companies are potentially losing out on thousands of pounds in tax relief through not understanding the complex legislation that governs where tax relief can and can’t be claimed and the activities to which it applies.
The firm, founded in 2018 by twin brothers Chris and Stephen Beale, boasts a team of talented individuals with a breadth of experience and knowledge gained from time spent on the ground, in everything from structural engineering to robotics, the food and drink industry, aerospace and construction, which feeds into helping clients identify qualifying expenditure and maximise their claims.
Over the past four years, CBTax has grown to a team of 35 employees, including sector specialists in engineering, construction and software, which has actively contributed to the business’s success. In recent years CBTax has been recognised as the fastest-growing professional services practice in the UK.
Managing Director Chris Beale said:
“The fact is that R&D tax relief is no longer a secret in the manufacturing and engineering sector. There was a time when companies hadn’t really heard of it, but they are more aware now. Our job is to ensure that companies are not undervaluing what they do and support them to know what qualifies for relief and how they can maximise their claims moving forward.”
R&D tax relief is not just for companies creating new products. Any project that advances a product, process or service, or makes an appreciable improvement to an existing product, project or service, or completes it in a fundamentally different manner, could potentially qualify if there is a level of technical uncertainty surrounding the development.
The technical team at CBTax is headed up by Associate Director Felix Key. Felix is well placed to lead the team and leverages his background in manufacturing and automotive engineering to provide robust technical justifications for previously unrealised expenditure. During a review of an injection moulding company’s previous claims, he and his team identified large portions of expenditure relating to projects that had not previously been included. As is often the case, they had primarily focussed on new product development and missed a great deal of internal projects that were seeking to improve the reliability and accuracy of their tooling.
With the depth of technical knowledge at CBTax, Felix and his team were able to quickly understand the technical challenges associated with this development and accurately identify what costs are attributable to the projects. This greatly improved the accuracy of the R&D claim and increased the benefit to the client by tenfold.
And it’s not just high-tech innovators that can benefit. Northamptonshire has remained a shoemaking capital for over 150 years, and CBTax has had the privilege of working with some of the most influential shoemakers across the county. The CBTax team has claimed back hundreds of thousands of pounds back to clients that push the boundaries within material and manufacturing engineering, particularly around the development of new sustainable products and eco-friendly improvements to internal processes.
“Although companies are aware of the benefits, we have seen instances where there has been a huge undervaluation of a claim, and that’s often because there’s a lack of understanding about the projects, and qualifying costs haven’t been identified by the team or their current advisors.
“The CBTax team have years of experience in engineering and between us we cover a broad range of sectors. That means that we speak the same language as our clients, and we always want to find out more about what they’re doing. Engineers are like magpies when they go into a workplace and they can’t help seeking out all the new equipment, processes and talking to the employees about how everything has been developed and how the system works.
“Compared to someone from a financial background, that expertise makes all the difference. Because we are familiar with technical report writing and we’ve experienced research and development first hand, we have a different level of understanding. We pride ourselves on being client facing and really getting to know the business or project, and through that we make the process as pain-free as possible.”
As an example, Senior Manager Daniel Jones recently consulted on a project in the aerospace industry, where a client felt their claim hadn’t been investigated fully by their previous advisor – a well-known and reputable accountancy firm. Following further investigation and in-depth discussions with the technical team, the client resubmitted an uplifted claim, which was over ten times the original value submitted.
“The client had spent vast sums of money on improving their manufacturing capability and developing state-of-the-art test facilities, but the previous claim had not identified this, and had only concentrated on new product development. As a result, it had missed the largest part of the claim. The client stated that their previous advisors had not gone into anywhere near the same level of technical detail during the meeting and the previous meeting was conducted by phone, which they did not like. I believe it’s incredibly important to have face-to-face meetings where possible, it’s great to walk around and see development first hand, and in most instances leads to additional projects being identified – subsequently building a more robust and accurate submission.
“We take all the hard work off the client’s shoulders and that’s what they appreciate, most technical teams do not have the time available in their busy schedules and also they don’t want to be preparing vast amounts of documentation for advisors to just copy and paste into reports. They want to have real conversations about the work they’ve been doing, and they are passionate about their work, and we as engineers love to share that passion. We take the burden away from the client and prepare articulated technical descriptions that clearly highlight the advancements and technical challenges faced during the project, ensuring all pertinent information is highlighted to HMRC and in turn, creating a robust submission.”
Daniel has a great background in engineering, having served in the Royal Engineers, being involved with the development and trialling of cutting-edge equipment and also being involved in ambitious construction projects throughout his time in the military. Since leaving the military, Daniel has been involved preparing R&D claims for some of the UK’s largest firms ranging from hyper-car prototyping, multi-national construction firms and world-leading precision engineering firms. He is well placed to discuss even the most cutting-edge technology with clients.
Alongside Felix and Daniel is Senior Technical Consultant Dainis Adamuks. Dainis also utilises his broad technical experience as a research engineer within the advanced manufacturing industry to maximise value for clients during R&D tax relief claims.
Working with an automation and robotics consultancy client, he managed to leverage his understanding of automation engineering principles and his previous experience working on robotics research programmes to efficiently steer conversations with the technical stakeholders. This made the technical discussions undertaken methodical, streamlined and reduced the requirement for client follow-up meetings as the necessary technical information was captured right-first-time. Dainis’s previous background in technical report and project proposal writing ensured that qualifying activities were presented to HMRC in an accurate and concise manner, as opposed to conventional claims delivered by non-technical individuals that lack technical detail and relevancy to the legislation guidelines.
During a claim with an additive manufacturing (AM) consultancy, he utilised his experience with scoping, managing and technically leading AM R&D projects to identify pockets of untapped qualifying activity and associated qualifying costs. Leveraging his understanding of research programme workflows, and the direct and indirect job roles involved in R&D project delivery, resulted in a larger claim value for the client as additional qualifying projects were identified that otherwise would have gone under the radar by non-technical teams.
“Due to our streamlined processes, many of our clients find the end-to-end claim journey efficient and are happy to recommend our services to their network. Utilising our engineering and project delivery experience allows us to effectively steer the conversation with technical stakeholders, and identify qualifying projects and costs that may have been missed by purely tax-specific teams.
“The technical team has experience in a wide range of sectors and use their broad understanding of engineering principles to qualify legislation-relevant activity in an accurate and concise manner. Our understanding of research programme workflows, and the complex interaction of project staff members and subcontractors, result in a more robust presentation of the projects to the HMRC – ultimately leading to larger claim values for the client.”
CBTax’s stated aim is to become the market leader in R&D tax relief claims and it is already well on the way to achieving that ambition. Growth has been meteoric and is expected to continue, with the team expected to grow by another seven members within the next few months. And, as the number of clients reaching out to the firm increases, the size of the team will naturally increase to cope with growing demand.
If you want to understand if your business is missing out, contact CBTax at www.cbtax.co.uk or call the team on 0333 455 9010