Haines Watts are a Top 20 firm of chartered accountants who specialise in advising and supporting owner managed businesses. We support over 35,000 businesses around the UK, which gives our clients access to a huge amount of business expertise and knowledge. We’re run by partners who are business owners themselves, meaning you not only get accountancy advice but support for the day to day business challenges you face.

1. Haines Watts North East
Focus on Research and
Development Tax Relief
Stephen Harris ACA, CTA
Sara Andrews ATT, BA (Hons)
Finance Camp 2018
July 2018
An introduction to unlocking the hidden tax
benefits of your innovation.

2. Haines Watts North East
Who are we?
10 August 2018 © HAINES WATTS | STEPHEN HARRIS
ACCESS TO
100+
SPECIALIST SERVICES
SUPPORTING YOUR BUSINESS
AND PERSONAL NEEDS
60+ NATIONAL LOCATIONS
1000+ PEOPLE SUPPORTING
CLIENTS
TOTAL TAX SAVED TOTAL ENHANCED R&D CLAIM
LAST YEAR TAX DEDUCTIONS SUCCESS RATE
£70m+ £350m+ 100%
Haines Watts is a Top 15 firm of chartered accountants who
specialise in advising and supporting business owners. We
support over 35,000 companies and business owners around
the UK, which gives our clients access to a huge amount of
business expertise and knowledge.
CENTRE OF EXCELLENCE STATUS
Stephen Harris
Technical Tax Manager
Sara Andrews
Tax Manager R e s e a r c h a n d d e v e l o p m e n t t a x r e l i e f

3. Haines Watts North East
What is R&D?
R&D tax relief is an incentive available to UK limited
companies which seeks to encourage investment in
innovation through new products and services.
HMRC statement:
“R&D for tax purposes takes place when a
project seeks to achieve an advance in
science or technology.”
Advancement in science or technology
Does your company attempt to develop technology
rather than simply use it?
Is the information readily available to the market?
Appreciable improvement
Does your company try to improve its products or
processes?
i.e. efficiencies, aesthetics, environmental factors.
Problem solving
Is your company involved in providing technically
challenging solutions to complex problems? Projects
don’t need to be successful to be eligible.
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4. Haines Watts North East
Where are we now?
• The rate of relief depends on the size of your
company
• Advanced Assurance for first time claimant
companies
2 options currently available:
Small Medium Sized Enterprise (SME) Scheme
130% from 1 April 2015
Large Company Scheme (RDEC) Scheme
12% from 1 April 2018
© HAINES WATTS | STEPHEN HARRIS 410 August 2018
SME scheme
For R&D, the definition of an SME is:
Turnover € 100 million
Balance sheet € 86 million
Staff number < 500 employees
From 1 April 2015, the tax relief on allowable R&D
costs is 230%. This means for each £100 of qualifying
expenditure, your company could have the income on
which Corporation Tax is paid reduced by an additional
£130 on top of the £100 spent. It also includes a
payable credit in some circumstances.

5. Haines Watts North East
Qualifying expenditure
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Qualifying expenditure
• Employee costs
• Gross Salary
• Employers NIC
• Employers Pension Contributions (including auto-
enrolment)
• Materials (consumed or transformed)
• Utilities
• Software
• Subcontractors/freelancers payments
• Qualifying Indirect Activities

6. Haines Watts North East
The claiming process
FIRST CONTACT
• We’ll come out and meet with you
and your team to discuss the types
of projects you’ve been working on.
• We’ll meet with the right ‘technical’
people to understand the challenges
you’ve faced and how you’ve
overcome them. This ensures we’ve
got a crystal clear picture of how
you operate and we capture
everything possible in your claim.
ASSEMBLING THE CLAIM
• At this point we’ll gather all the
relevant financial records, analyse
the figures (including payroll and
subcontractors) and produce a
precise figure which will indicate
how much tax you’ll save.
• We utilise the records you have at
your disposal to produce an
accurate representation of your
business.
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PROJECTS AND REPORTING
• We’ll then create a bespoke R&D
report detailing your company’s
eligible activity and why you qualify.
• Through conversations and meeting
with key members of your team, we
translate the technical side of your
qualifying work into tax savings.
• Our team has completed hundreds
of claims, so our process is both
seamless and efficient.
• All of our claims undergo a
comprehensive review process.
SUBMISSION
• We then submit it to HMRC alongside
an amended CT600. From this point,
we handle all communication with
HMRC regarding your claim.
• In the unlikely event of an enquiry,
we’ll deal with everything on your
behalf. We’ve got a 100% record with
our claims, having overcome the few
enquiries that have been raised.
• Most important from our perspective
is communication. We aim to keep
you fully up to speed at each stage
and also be available if you have any
queries.
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7. Haines Watts North East
SME relief example
Example A is a profitable company
• Profits £200,000
• R&D Qualifying Expenditure £100,000
• £100,000 x 130% = £130,000 additional deduction
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Without R&D
Profit £200,000
Corporation tax 19% (£38,000)
Retained profit £162,000
With R&D
Profit £200,000
R&D relief (£130,000)
Profit chargeable £ 70,000
Corporation tax 19% (£ 13,300)
Retained profit £186,700

8. Haines Watts North East
SME relief example
Example B is a loss making company
• Current year loss £100,000
• R&D Qualifying Expenditure £100,000
• £100,000 x 130% = £130,000 uplift
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Tax credit
Loss (£100,000)
R&D uplift (£130,000)
(£230,000)
Tax credit (cash) 14.5% £ 33,350
Carry forward
Loss (£100,000)
R&D uplift (£130,000)
(£230,000)
Carry forward 19% £ 43,700

9. Haines Watts North East
Business we work with
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ARCHITECTURE
Using new designs
techniques and
implementing new
technologies into
buildings.
Some of the many
businesses we work with…
Engineering
Digital marketing
Medical
Fabrics
Electronics
Waste & recycling
Agriculture
Furniture
Mechanical
Oil & gas
Veterinary
Automotive
Packaging
Chemical
Machinery
Renewable energy
Aerospace
GLASSWARE
Developing and creating
distinctive new products
using state-of-the-art
technology.
FOOD MANUFACTURER
Exploring new flavours
and tastes in food/drink
products.
CONSTRUCTION
Using new building
materials to improve the
efficiency and process of
building construction.
FABRIC/FASHION
Trialling new materials
and overcoming design
issues with innovative
solutions.
IT/SOFTWARE
Designing games and
developing cross-platform
mobile applications.

10. Haines Watts North East
Architect case study
What they do
• A leading North East architecture company
• Improving efficiencies in both build and design
• Integrating new technologies into buildings
What we did
• Identified staffing costs, subcontractors and overheads
• £1.1m+ tax relief in total over 4 year period
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Client info
Turnover
£10m+
Employees
<100
Balance sheet
<£5m
Year Tax relief accessed
2013 £206k
2014 £293k
2015 £330k
2016 £353k
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11. Haines Watts North East
IT case study
What they do
• IT of software integration specialist
• Work with leading telecoms providers
• Build bridges between software and new devices
What we did
• Identified qualifiable projects and activity
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Client info
Turnover
£21m+
Employees
<80
Balance sheet
<£3.5Year Tax relief accessed
2014 £131k
2015 £249k
2016 £135k

12. Haines Watts North East
Engineering case study
What they do
• An engineering company working in the oil & gas sector
• Provide pressure pumping systems for offshore oil rigs
• Design and build bespoke products worldwide
What we did
• We were able to identify that the client could claim under the ‘first of class’ principles
within R&D legislation
• Claimed retrospectively and accumulated largest R&D claim to date, over £2.5m total
tax benefit
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Client info
Turnover
£13m+
Employees
<80
Balance sheet
<£1.5m
Year Tax refund accessed
2014 + 2015 £2.3m

13. Haines Watts North East
R&D Tax Credits
HMRC
• R&D specialist units
• Published guidance and common errors
• SME tax credits aim to be dealt with within 28 days
• The total amount of R&D support claimed rose to
£2.9bn last year – up nearly 20% from the previous
year
• North East has one of the lowest claim rates
• R&D expenditure is on the rise, with businesses
spending an extra 30%
Technical points
• Retrospective claim time limits
• Notified state aid and subsidies
• PAYE and VAT arrears
• Claim only if going concern
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Haines Watts North East
Sectors claiming R&D Tax Credits
30%
25%
20%
9%
5%2%
2%
1%
1%
1%
1% 1% 1% 1% Manufacturing (30%)
Information & Communication (25%)
Professional, Scientific & Technical (20%)
Wholesale & Retail Repairs (9%)
Admin & Support Services (5%)
Construction (2%)
Other services activities (2%)
Financial & Insurance (1%)
Education (1%)
Health & Social Work (1%)
Arts, Entertainment & Recreations (1%)
Transport & Storage (1%)
Water, Sewage and Waste (1%)
Agriculture, Forestry, Fishing (1%)(Source: HMRC, September 2017)

15. Stephen Harris ACA, CTA
Sara Andrews ATT, BA (Hons)
ssharris@hwca.com
Tel: 0191 269 9960
www.hwrd.co.uk
Haines Watts Newcastle
Floor 11
Cale Cross House
156 Pilgrim Street
Newcastle Upon Tyne
15
Haines Watts Darlington
Sterling House,
22 Saint Cuthbert's Way
Darlington
DL1 1GB
10 August 2018 © HAINES WATTS | STEPHEN HARRIS