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R&D Tax Relief for the Agriculture Sector

tractors on a field against sunset

The agriculture and farming sector is increasingly exploiting new science and technology. Farming operations are becoming more sophisticated and farmers are investing in various innovative projects for their buildings, equipment and new technology to meet the demands of their industry.

However in 2019 HMRC reported that businesses in the Agriculture, Forestry and Fishing industry were under-claiming R&D tax credits. This means that there are still a large number which are missing out on claiming tax relief on R&D projects which they may be entitled to receive.

What is R&D tax relief?

In 2000 the UK government introduced a scheme to encourage scientific and technological innovation. The R&D tax credits scheme allow companies that carry out qualifying R&D related to their trade to claim an extra corporation tax deduction for certain qualifying expenditure. Furthermore the UK government have pledged to run R&D tax credits until 2032.

According to HMRC, a project to develop a new feed or to grow crops that have substantially increased vitamin content, produce better or more reliable yields, or are more tolerant to weather conditions and resistant to blight, would all be considered as qualifying R&D. These are just a few examples and more can be found on our agriculture section.

R&D tax relief claim – Whartons Nurseries

At Easy R&D we have processed hundreds of R&D tax relief claims since 2015. One of our agriculture clients who have successfully claimed R&D tax relief is Whartons Nurseries.

Whartons Nurseries are a garden rose powerhouse cultivating 1.5 million plants each year, the largest wholesale grower in the UK. To explain his company’s experience of processing an R&D claim with Easy R&D, Paul Wharton who is Director at Whartons Nurseries, stated:

We had heard of the HMRC R&D tax credit scheme and thought it might apply to us. Through a recommendation by a friend, we started talking to Easy R&D. They quickly helped us shine a light on our business and realise the true extent of the R&D we had been carrying out. But nothing had been claimed back from HMRC. Easy R&D’s input helped us make a large claim which resulted in a substantial tax repayment from HMRC. This money is put back into R&D to help us grow the very best garden roses whilst retaining our leading position in the UK market.

How Easy R&D can help your business

At Easy R&D we are on a mission to support innovative businesses by helping them to claim R&D tax credits which they may be entitled to receive. This generous tax benefit can help a business to unlock resources, and for many, this enables a culture of innovation to be embedded into an organisation.

Our R&D Consultants are knowledgeable, highly experienced and can identify R&D costs which qualify for the scheme. We provide full end-to-end support to process claims, flexing around the needs of the client to minimise their time commitment.

If you’d like to enquire about R&D tax relief on any of your agriculture projects, you can speak to one of our experienced Consultants on 0800 195 7516 or submit an enquiry form for a free consultation.

Are You Eligible for R&D Tax Credits?

Research and development is crucial for businesses and for the UK economy as a whole.  This was the reason that in 2000 the UK government introduced a system of R&D tax credits that can see businesses recoup the money paid out to conduct research and development and even a substantial amount on top of this.  But how does a business know if it qualifies for this payment?  And how much would the claim be for if it does qualify?

R&D tax credit basics

There are two bands for the R&D tax credit payment system that depends on the size and turnover of the business.  These are classed as Small and Medium-sized Enterprises (SME) and as Large Company.

To be classed as an SME, a business must have less than 500 employees and either a balance sheet less than €86 million or an annual turnover of less than €100 million.  Businesses bigger than this or with a higher turnover will be classed as a Large Company for the research tax credit purposes.

The biggest reason that businesses don’t claim for the R&D tax credit that they are able to is because they either don’t know that they can claim for it or that they don’t know if the work that they are doing can qualify.

Improvement in R&D knowledge

Research and development must be in one of two areas to qualify for the credit – as either science or technology.  According to the government, the research must be an ‘improvement in overall knowledge and capability in a technical field’.

Advancing the overall knowledge of capacity that we already have must be something that was not readily deducible – this means that it can’t be simply thought up and needs something kind of work to create the advance.  R&D can have both tangible and intangible benefits such as a new or more efficient product or new knowledge or improvements to an existing system or product.

The research must use science of technology to duplicate the effect of an existing process, material, device, service or even a product in a new or ‘appreciably improved’ way.  This means you may take an existing device and conduct a series of tests to make it substantially better than before and this would qualify as R&D.

Examples of scientific or technological advances might include:

  • A platform where a user uploads a video and image recognition software could then tag the video to make it searchable by content
  • A new type of rubber that has certain technical properties
  • A website that takes the system or sending instant messages and makes it possible for 400 million daily active users to do so instantly
  • A search tool that could sort through terabytes of data across shared company drives around the world

R&D tax credits – Scientific or technological uncertainty

The other area that can qualify for the tax credit is termed as solving a scientific or technological uncertainty.  Such an uncertainty exists when it is unknown whether something is either scientifically possible or technologically feasible.  Therefore, work is required to solve this uncertainty and this can qualify for the tax credit.

The work needs to be carried out by competent, professionals working in the field.  Work that improves, optimises or fine tunes without materially affecting the underlying technology don’t qualify under this section.

Receiving the R&D tax credit

If the work carried out by the company qualifies under one of the criteria, then there are several things that the company can claim for based around the R&D work being done.  The company must be a UK company to receive this and have spent the actual money being claimed in order to claim the tax credit.

Areas that can be claimed for under the scheme include:

  • Wages for staff under PAYE who were working on the R&D
  • External contractors who receive a day rate can be claimed for on the days they worked for the R&D project
  • Materials used for the research
  • Software required for the research

Another factor to the tax credit is that it doesn’t need to be a success in order for the claim to be made.  As long as the work qualifies under the criteria, then even if it isn’t a success, then the tax credit may be claimed for.  By carrying out the research and failing, the business is increasing the existing knowledge of the subject or working towards curing a scientific or technological uncertainty.

How much R&D tax relief can businesses claim?

For SMEs, the amount of tax relief that can be claimed is currently up to 33% of R&D qualifying costs.  This credit is also available if the business makes a loss or doesn’t earn enough to pay taxes on a particular year – either the claim can be surrendered or the credit at a rate of 14.5% of R&D qualifying costs or held against tax payments for the following year.

Making an R&D tax credit claim

The system to make the claim can be a little complicated and for this reason, Easy R&D now offer a service where they can handle it for the business.  This involves investigating to be certain the work will qualify for the credit.  Once it is established that it does, documents can be collected to prove the money spent by the business on the research and then the claim can be submitted.  Under the current system, the business could see the tax relief within six weeks of the date of claim without any further paperwork required.

Easy R&D have helped hundreds of companies to make R&D tax relief claims and many of them involved innovative software. Contact your nearest R&D Consultant to see if you can claim – 0800 195 7516 

R&D at Whartons Nurseries

R&D at Whartons Nurseries

Whartons Nurseries are a garden rose powerhouse cultivating 1.5 million plants each year, the largest wholesale grower in the UK. Each week they deliver stock to over 700 garden centres and mail order wholesalers from their range of 400 varieties.

Paul Wharton, Director at Wharton Nurseries, explained about his company’s research and development.

“We’re a specialist grower and our key areas of operation include production, land management, varietal testing and pest control. To bring new products to market we have to develop our own pesticide solutions in-house. These have to not only benefit the plants but also comply with regulations and our desire to preserve nature.

We had heard of the HMRC R&D Tax Credit scheme and thought it might apply to us. Through a recommendation by a friend, we started talking to Easy R&D. They quickly helped us shine a light on our business and realise the true extent of the R&D we had been carrying out. But nothing had been claimed back from HMRC.

Easy R&D’s input helped us make a large claim which resulted in a substantial tax repayment from HMRC. This money is put back into R&D to help us grow the very best garden roses whilst retaining our leading position in the UK market.

It’s a shame we did not start working with Easy R&D earlier, but we look forward to working on the claims in the future with them!”

Making a claim

Easy R&D have helped hundreds of companies with R&D tax relief claims including the agricultural and horticulture sectors. Contact your nearest R&D Consultant to see if you can claim – 0800 195 7516