A case study highlighting how legislative changes can ignite research and development activities and unlock R&D tax credits

 

R&D tax credits in practise: overview

Midtec Products is a leading manufacturing company based in Ammanford, South Wales.  They specialize in the production of chimney cowls and flue terminals, products that are nestled in many homes.

Vast amounts of research and development takes place behind the scenes by experienced engineers, ensuring that their products are continually developed to guarantee optimum performance and quality.

Challenge presents an opportunity

Midtec’s requirement for development was driven by the release of new Eco criteria sanctioned by the Government department ‘DEFRA’. The legislation provided new guidance on the clean burning of kiln dried hard wood on domestic stoves, in a bid to reduce levels of harmful emissions generated during the fuel burning process.

New stoves have inbuilt technologies which can allow them to achieve the new standards. However, existing wood burning stoves are unable to meet this requirement. Even though it is not a legal requirement for existing stoves to meet the new legislation, Midtec spotted an opportunity to develop a solution for environmentally conscious users.

Midtec product’s solution

Midtec’s technical expertise allowed them to develop a new emissions reduction device, capable of being retrofitted to pre-existing solid wood burning stoves. This device allows users to substantially reduce the levels of harmful emissions generated during the fuel burning process, allowing it to meet the new standards.

The benefits of R&D tax credits

The technical nature of the project inevitably provided challenges for Midtec; challenges that required time, effort and money to overcome.

As such, LimestoneGrey was able to identify costs directly linked to these problem-solving activities, including:

Staff costs

Agency staff

Materials

As a result, Midtec Products was awarded £40,000 in tax free cash.

R&D tax credit benefit

Changes to industry specific legislation should definitely be a trigger point for assessing whether your company qualifies for R&D tax credit relief. Legislative alterations can:

  1. Stimulate a project into action as a result of an identified opportunity; or
  2. Force a company into make changes to products or processes

Both of the above scenarios can catapult you in R&D tax credit territory.

Matthew Jones

Managing Director, LimestoneGrey

The R&D tax credit processs

With experience of R&D tax credits in the past, Midtec Products had the insight to explore the possibility of claiming R&D tax credits for the above project.

LimestoneGrey worked closely with the Midtec team to identify which aspects of the project qualified for the relief and what costs could be associated with those activities, providing the foundation for LimestoneGrey to prepare the R&D calculation and accompanying technical report.

Trefor Jenkins, Director at Midtec Products, commented:

‘We had excellent advice and support from LimestoneGrey in handling the submission of the claim and guiding us through the process to ensure full compliance with HMRC requirements.’

Matthew Jones, LimestoneGrey, further stated:

‘It was a pleasure working with Trefor and the team at Midtec Products. The passion for their craft and their ability to produce quality solutions for gaps in the marketplace is incredible.’

 

Midtec Products: find out more

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