25TH OCTOBER, 2018

Why Isn’t The Agricultural Industry Claiming R&D Tax Credits?

According to HMRC, new statistics reveal just £10 million in R&D tax credits was claimed by UK Agriculture companies in 2017. This may sound like a lot of money and it is, but this amount accounted for less than one percent of total R&D tax credit claims submitted by UK businesses for the 2017 tax year. Now, it’s worth noting that it is a significant increase on the industry’s 2016 figures which showed just £5 million being claimed. Nonetheless, the figures still suggest the Agricultural industry is claiming far below the national average.

The latest statistics released by HMRC show that an average of £41,000 per company was being claimed in R&D tax credits from those working in agriculture, forestry and fishing industries. The national average however, across all industries was £85,000, more than double that of agricultural businesses. These figures lead us to beg the question of why?

Our experience with R&D tax credits in the agricultural industry

Based on our experience of helping companies in the industry apply for the scheme. We find it’s a simple matter of agricultural companies not having the knowledge that these tax credits exist. If they do, many business owners feel they are too inexperienced to submit claims or just believe that they don’t qualify.

It’s no surprise really when most people think of research and development, it’s easy to come to the assumption that it’s is only for those floating around in white lab coats at huge corporations, where millions of pounds are ploughed into their high-tech research. Don’t get me wrong, these companies are entitled to the R&D credits, but so are agricultural business. In fact, we’ve found that some of the smaller agricultural businesses usually come up with some of the most creative new ideas for the industry; thanks to their first-hand experience in the job.

Why should agricultural companies be interested in R&D tax credits?

What makes this tax credit scheme such a great incentive is the huge difference it can make to the balance sheets of these businesses.

For these reasons and because the scheme is such an easily accessible incentive, I strongly recommend all those in the industry seek R&D tax credit advice from an expert and do so immediately. The money is available and can potentially make a huge difference to agricultural businesses. All companies who are putting efforts into the development of new technologies or even simplifying old processes and creating new, more inventive ways of processing materials and products may be eligible and should seek out an advisor, simply just to ask the question of whether they qualify.

Final thoughts...

It’s no doubt the talent is there and that businesses of all sizes are putting in efforts to create new sustainable ideas for the future of agriculture. You only need to walk around the likes of the Great Yorkshire Show or even your local farm to see advance tech such as drones and agri-bots aiding fertilisation and harvesting.  Even new processes such as vertical farming was a product of R&D that would’ve been eligible under the scheme.

For anyone interested in finding out more about these tax credits. HMRC have put together a great resource for businesses in the industry to asses their eligibility, which you can access here.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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Myriad Associates helps businesses maximise tax reliefs and secure R&D grant funds. We specialise in R&D Tax Credits, Video Games Tax Relief, Innovate UK grants, Horizons 2020 grants, and Research and Development Capital Allowance Claims.

  • Submitting R&D tax claims since 2001
  • 100% success rate
  • Over £100m claimed and counting
  • Industry leading specialists
  • In-house technical, costing and tax experts
  • Member of the Research and Development Consultative (RDCC) committee

Meet some of the team behind Tax Cloud

Barrie Dowsett ACMA CGMA Chief Executive Officer
David Farbey MA, FISTC, FRSA Senior Technical Consultant
Deborah Chapple ATT Corporate Tax Senior Associate
Lauren Olson MA, MISTC Technical Consultant