Innovation happens when great ideas have a useful application. Surely if there was ever a time for innovation to stand proud and shine that is now.
The great news is that the UK government rewards innovation. Investment in innovation can produce real cash returns. By claiming Research and Development (R&D) tax credits companies claiming under the SME scheme can benefit by a return of 33.35% of real cash, if they are loss making. The equivalent for profit making companies is 43.7% delivered through a reduction in their corporation tax liability.
In financial terms this means that an investment of £100,000 in qualifying costs could deliver a return of £33,350 for a loss-making company, or £43,700 for a profit-making company.
Cash is always important to a company, but arguably more now than ever before.
These returns are enviable and much sought after. Tax advisors can help companies access these returns.
Traditionally most business transactions and interactions occur through developing relationships. The face to face meeting, the handshake, the ability to ‘look into someone’s eyes’ when doing a deal. Trust is extremely important as this gives confidence about the deal. Remote working has become more popular but this has accelerated and is the ‘new norm’ in the current lock down.
How will innovation help ‘business’ to continue in the current climate? We already benefit from the fruit of innovation. The humble telephone, Skype, Zoom and other communications platforms have all become part of the norm for doing business. These technologies seek to help us continue to try and do business through relationships. Video-conferencing seeks to enable us to interact person to person; the ability to see someone’s facial expressions and reactions to conversation, to try and gauge what they are really thinking.
However good a video conferencing platform is, this cannot easily assist transactions which have traditionally been effected through developing person to person relationships. So how can innovation help? Holograms are not new technology. A hologram is a three-dimensional image projected onto a two-dimensional surface. These appear in many aspects of life; on bank notes, as well as in the entertainment industry projecting the image of a famous band into a theatre to give the concert feel, without the artist actually being there.
Do holograms or other similar innovations have a place to help businesses interact, to try to bring the ‘human touch’ to transactions?
Automation is another area of technology that is rife with innovation and is being used to support society. While automation is not a new concept, many believe we are only scratching the surface to see the potential benefit this could be to society.
The ventilator is a technology that is proving to be vital in the fight to save lives with the pandemic that has gripped the planet. This is an appliance that used for artificial respiration; it aids breathing. Many hi-tech companies that have not traditionally been involved in the development and manufacture of ventilators are applying their manufacturing facilities to develop this life-saving equipment to meet a human need. Some are even using their own innovation to develop ventilators with advanced technology.
In recent years we have seen the emergence of autonomous vehicles. Driverless cars are embraced by some but create genuine fear and anxiety for others. But given the current climate which encourages limited human interaction, is investment in this technology going to be accelerated? Being instructed to stay at home to prevent the spread of a virus we are relying on deliveries of food and other essential supplies. However, these deliveries require human interaction. How long will it be before our supermarket shopping and takeaway food is prepared, packed and delivered by robots?
So how can companies showcase their innovation? Surely if there was ever a time for innovation to be needed it is now.
In these strange times, news reports have highlighted a number of inventions that are emerging in response to COVID 19;the ‘virus-killing’ snood and the hands-free door handle are examples of innovation that is designed to prevent the spread of the virus.
Does this support the notion that necessity is the mother of invention?
Innovation is embraced by the UK government. The UK government recently reiterated its commitment that spending across the public and private sectors on research and development would be 2.4% of GDP by 2027. The government is prepared to invest financially to encourage research and development, to engender an innovative society.
So, will companies embrace this opportunity? Will these companies claim their R&D tax credits and other funding? Society is crying out for answers to the current problems. Funding is there to encourage companies to be innovative. The question is whether companies will grab the opportunity?
Please speak to a specialist within our innovation taxes team if you would like support in accessing these valuable tax reliefs and unlocking potential cash for your business.
COVID-19 related webinars
Insights and news