Technology companies have always focused on innovation, and that is especially true when it comes to the SaaS sector. Perhaps then it is no surprise that new research carried out by Notion Capital Strategic Partner ForrestBrown, confirms that tech firms are also out in front when it comes to claiming research and development tax credits.
Spotlight on innovation
The complete report, ‘A Nation of Innovators’ is the first of its kind in a decade. It asks 247 UK business leaders about their appetite for innovation and what barriers, if any, stand in their way. It also explores understanding and uptake of the government’s R&D tax credit incentive. You can download your copy, here.
R&D tax credits: awareness is high but misconception is rife
Although 91% of technology professionals are aware of R&D tax credits, it seems that one in ten do not know how to make a claim, or are confused over what work qualifies. A significant 77% of respondents did not know they could include unsuccessful R&D in their claims and 60% were not aware that R&D work relating to changes or modifications to an existing product is eligible. That represents an unnecessary black hole of potential innovation funding that is being missed by UK businesses – and no sector may need this more than SaaS firms, where developing a product is like a corporate arms race.
Breaking down the barriers
Whilst many companies face barriers to innovation due to time, talent or short term thinking, the report shows that for 59% of businesses, the greatest barrier is a lack of financial resources. Yet when tech companies did claim R&D tax credits, it made an extremely positive difference to their company’s financial position.
The majority of tech firms we work with at ForrestBrown view R&D tax credits as a crucial source of funding that allows them to go on innovating, hire new talent and develop their product fit. R&D tax credits help them to grow their business and in turn boost the sector. For SaaS businesses, it is particularly interesting when considered as an alternative method of funding, delaying the need to go out and dilute your equity.
Don’t miss out
Even if you have already claimed R&D tax credits, there is a distinct possibility that you could be eligible for more. ForrestBrown are R&D tax credit specialists – in fact that is all we do and we win awards for the quality of our service. We work with clients to not only identify qualifying R&D, but optimise a claim to ensure that everything relevant is included. As our survey revealed, such is the misconception surrounding this tax incentive that a conversation with us often uncovers whole projects that had been missed by other advisers.
Apperio, one of Notion Capital’s portfolio companies, has created a new real-time fee tracker platform for the legal sector. Building the platform from scratch has required significant investment and Apperio has recouped much of these costs using research and development (R&D) tax credits. Talking about the benefit, Nicholas d’Adhemar, founder and CEO said:
For the first year or so of being in business, I was entirely focused on building my product and simply didn’t come across R&D tax credits. I’ve now completed two claims with ForrestBrown and have come to view the cash as extra working capital that I can use to hone the development and market fit of my product. We’re constantly investing in the Apperio platform to improve it and the fact I can recoup a portion of these costs means we can invest more, develop at pace and grow faster.
Find out more
Your personal copy of A Nation of Innovators report is available for you to download now.
If you would like your recent R&D tax credits claims reviewed by the award winning ForrestBrown team, give us a call on 0117 926 9022.
Post produced in partnership with Adam Kotas, Director at ForrestBrown.