WEBVTT 00:00:00.000 --> 00:00:02.859 Welcome to the Innovation Conversation, a podcast 00:00:02.859 --> 00:00:05.400 about innovators, both in business and real life. 00:00:05.860 --> 00:00:08.419 Hosted by myself, Ricardo Rescual and Harry McCona. 00:00:08.660 --> 00:00:11.660 This podcast is sponsored by OpenExperts .com. 00:00:11.939 --> 00:00:14.140 OpenExperts is a place to go if you're looking 00:00:14.140 --> 00:00:16.140 to talk with top experts from around the world. 00:00:16.539 --> 00:00:20.879 That is Open -Experts .com. This podcast is also 00:00:20.879 --> 00:00:24.539 sponsored by StartupNetworks .co .uk. Startup 00:00:24.539 --> 00:00:26.820 Networks, it's an online forum where you can 00:00:26.820 --> 00:00:28.739 find all the resources you need to learn your 00:00:28.739 --> 00:00:31.440 startup. from brands to investors to tips and 00:00:31.440 --> 00:00:33.880 tricks on how to be successful to start. Hi, 00:00:33.880 --> 00:00:35.859 and welcome to another episode of the Innovation 00:00:35.859 --> 00:00:38.200 Conversation. Today, we are joined by James and 00:00:38.200 --> 00:00:41.679 Gajan from RCK Partners. Welcome, guys. Can you 00:00:41.679 --> 00:00:43.539 please tell us a little bit more about yourselves 00:00:43.539 --> 00:00:47.640 and what RCK does? OK, well, I can start. So 00:00:47.640 --> 00:00:50.700 my name is James Gibson. I'm the chief commercial 00:00:50.700 --> 00:00:54.100 officer here at RCK Partners. And my name is 00:00:54.100 --> 00:00:56.939 Gajan Girishalingam. I'm an R &D tax consultant 00:00:56.939 --> 00:01:01.179 here at RCK Partners. So RCK, we are a financial 00:01:01.179 --> 00:01:04.500 consultancy specializing in tax incentives. The 00:01:04.500 --> 00:01:07.700 business was founded in early 2020. So we're 00:01:07.700 --> 00:01:10.920 just over four years old and we are based in 00:01:10.920 --> 00:01:14.420 the city of London on Lime Street. Interesting. 00:01:15.180 --> 00:01:18.120 This is for me a very interesting topic because 00:01:18.120 --> 00:01:19.900 I obviously talk with a lot of startups, a lot 00:01:19.900 --> 00:01:22.819 of investors as well, and I come to realize that 00:01:22.819 --> 00:01:25.060 there's actually not that much knowledge around 00:01:25.060 --> 00:01:27.620 R &D. So can you tell us a bit more about exactly 00:01:27.620 --> 00:01:30.319 what it is? How does it work? Because I have 00:01:30.319 --> 00:01:34.420 literally no idea. So R &D tax or the incentive 00:01:34.420 --> 00:01:37.799 itself was brought in the year 2000. It was to 00:01:37.799 --> 00:01:40.700 incentivize innovation was their primary goal. 00:01:40.980 --> 00:01:44.180 How they did this by utilizing R &D related costs 00:01:44.180 --> 00:01:48.939 to reduce tax liabilities of companies. If the 00:01:48.939 --> 00:01:50.980 company wasn't paying any tax then they could 00:01:50.980 --> 00:01:53.900 receive this benefit in another form like a credit. 00:01:54.189 --> 00:01:57.810 Basically, what we're looking for is the qualifying 00:01:57.810 --> 00:02:00.510 categories in terms of the curve guidelines is 00:02:00.510 --> 00:02:04.030 a project which seeks to advance science or technology. 00:02:04.530 --> 00:02:08.250 That's quite a vague and broad spectrum. But 00:02:08.250 --> 00:02:11.189 that's what providers like us are here to look 00:02:11.189 --> 00:02:15.490 at. Yeah. So the scheme is all about incentivizing 00:02:15.490 --> 00:02:19.110 innovation in the UK, making the UK more competitive. 00:02:19.620 --> 00:02:21.860 various other countries in the world, the majority 00:02:21.860 --> 00:02:23.520 of countries in the world have some form of R 00:02:23.520 --> 00:02:26.759 &D incentive. Obviously the UK's one is designed 00:02:26.759 --> 00:02:30.080 to attract more investment into the UK and stimulate 00:02:30.080 --> 00:02:35.219 our sort of tech base. But is it for any company 00:02:35.219 --> 00:02:36.900 or it needs to be very interesting specific? 00:02:37.080 --> 00:02:39.280 So you mentioned what type of companies can actually 00:02:39.280 --> 00:02:42.710 apply for this? So the criteria is really limited 00:02:42.710 --> 00:02:46.569 companies who are liable to tax. That's what 00:02:46.569 --> 00:02:50.550 we can claim only tax for. In terms of the qualifying 00:02:50.550 --> 00:02:54.590 criteria in its broader sense really is a project 00:02:54.590 --> 00:02:56.650 or set of projects we seek to advance science 00:02:56.650 --> 00:02:59.509 and technology through a resolution of scientific 00:02:59.509 --> 00:03:02.629 or technological uncertainty. Now that is a bit 00:03:02.629 --> 00:03:05.210 of a mouthful so I will break it down for the 00:03:05.210 --> 00:03:09.210 benefit of you guys. It's basically three steps. 00:03:10.030 --> 00:03:12.770 What's the baseline scientific or technology 00:03:12.770 --> 00:03:15.490 available in the industry currently? How you're 00:03:15.490 --> 00:03:17.689 going above and beyond that? What kind of R &D 00:03:17.689 --> 00:03:20.090 activities, research, development you're undertaking 00:03:20.090 --> 00:03:23.430 as a company? And any uncertainties or challenges 00:03:23.430 --> 00:03:26.169 you faced along the way? What kind of technological 00:03:26.169 --> 00:03:29.009 things you are uncertain of when going into the 00:03:29.009 --> 00:03:33.210 project itself? If we can qualify that and if 00:03:33.210 --> 00:03:39.400 we can basically... take that into a explainable 00:03:39.400 --> 00:03:42.699 approach to HMRC then that's really it can be 00:03:42.699 --> 00:03:46.740 any company large or small and obviously it seems 00:03:46.740 --> 00:03:49.460 slightly different but we'll get into that soon 00:03:49.460 --> 00:03:52.860 I'm sure but yeah large or small in any industry 00:03:52.860 --> 00:03:56.000 as long as they hit those main criteria of seeking 00:03:56.000 --> 00:03:58.580 advanced resolution of uncertainty. Does it cost 00:03:58.580 --> 00:04:00.719 anything? I mean, how does it actually work? 00:04:01.060 --> 00:04:03.340 The process of applying and then I'm assuming 00:04:03.340 --> 00:04:06.020 you do actually get some money in the end. So 00:04:06.020 --> 00:04:10.259 how long does it take as well? Yeah, so we certainly 00:04:10.259 --> 00:04:12.520 try and make the process as straightforward and 00:04:12.520 --> 00:04:15.240 painless as possible for our clients. In terms 00:04:15.240 --> 00:04:18.240 of how the benefit is received, it's either a 00:04:18.240 --> 00:04:22.000 tax reduction or a rebate. So if you're in a 00:04:22.000 --> 00:04:25.120 profit making position, and you've paid corporation 00:04:25.120 --> 00:04:28.379 tax, the R &D benefit can often reduce that tax. 00:04:28.680 --> 00:04:31.540 So it'll either be a sort of cash rebate on the 00:04:31.540 --> 00:04:33.680 tax that's been paid, or if you're yet to pay 00:04:33.680 --> 00:04:36.199 the tax, it's a reduction. If you're a loss -making 00:04:36.199 --> 00:04:38.519 business, then you can receive the benefit as 00:04:38.519 --> 00:04:40.959 a straight sort of cash injection to the business. 00:04:41.259 --> 00:04:44.720 In terms of timeframe, yeah, certainly we always 00:04:44.720 --> 00:04:47.800 aim to have our claims turned around inside of 00:04:47.800 --> 00:04:52.180 four weeks. And then HMRC, as per their own guidelines, 00:04:52.600 --> 00:04:55.879 They advertise 28 days as the turnaround, the 00:04:55.879 --> 00:04:57.959 processing time for their R &D claims, which 00:04:57.959 --> 00:05:00.160 is pretty quick. Certainly, though, at busier 00:05:00.160 --> 00:05:04.000 times of the year, those timelines get extended 00:05:04.000 --> 00:05:06.500 somewhat. But certainly, from start to finish, 00:05:06.560 --> 00:05:10.040 for our clients, we aim to have everything resolved 00:05:10.040 --> 00:05:14.350 within two or three months. And, you know, the 00:05:14.350 --> 00:05:17.810 role that RCKTA takes on all this, is it like 00:05:17.810 --> 00:05:19.629 more of an active role where you actually, you 00:05:19.629 --> 00:05:22.069 know, handheld people all the way through the 00:05:22.069 --> 00:05:25.879 process or is it more of an advisory role? So 00:05:25.879 --> 00:05:28.100 in terms of the role itself, once a client's 00:05:28.100 --> 00:05:32.220 been on boarded by our commercial department, 00:05:32.620 --> 00:05:34.540 they will then obviously have access to them, 00:05:34.560 --> 00:05:36.939 but then we have an initial handover call. So 00:05:36.939 --> 00:05:40.459 that's when the commercial lead passes on some 00:05:40.459 --> 00:05:44.500 of the responsibility to the consultant. We have 00:05:44.500 --> 00:05:48.019 a relatively informal to formal first chat about 00:05:48.019 --> 00:05:50.519 the company, its nature, but that's mainly to 00:05:50.519 --> 00:05:54.300 do with get to know you kind of approach as well 00:05:54.300 --> 00:05:57.399 as the due diligence behind it. We explain the 00:05:57.399 --> 00:06:00.180 criteria, what we look for, what HMRC look for, 00:06:01.300 --> 00:06:04.180 in terms of my specifically what I do is kind 00:06:04.180 --> 00:06:06.939 of help and provide support throughout the whole 00:06:06.939 --> 00:06:10.800 process to the client themselves. We find that 00:06:10.800 --> 00:06:13.620 different clients take a different degree and 00:06:13.620 --> 00:06:17.160 different approach to... for this process. Some 00:06:17.160 --> 00:06:20.699 may have done R &D before, some people have ongoing 00:06:20.699 --> 00:06:22.959 claimers or some people are completely new, some 00:06:22.959 --> 00:06:25.259 small startups are completely new to the game. 00:06:25.800 --> 00:06:29.500 So it takes a very client focused approach and 00:06:29.500 --> 00:06:31.980 that's something that us consultants and us here 00:06:31.980 --> 00:06:35.639 at RCK are very dedicated and technically claimed 00:06:35.639 --> 00:06:39.259 to do so and hold them through and give support 00:06:39.259 --> 00:06:41.759 when necessary. And we always try and link up 00:06:41.759 --> 00:06:45.699 the relevant consultant here at RCK with with 00:06:45.699 --> 00:06:47.579 the client in terms of their industry background. 00:06:48.060 --> 00:06:49.899 You know, we work with lots of software companies 00:06:49.899 --> 00:06:52.680 and we've got a team of consultants with computer 00:06:52.680 --> 00:06:54.339 science background. So obviously they're speaking 00:06:54.339 --> 00:06:56.860 the same language. So obviously someone like 00:06:56.860 --> 00:06:59.000 Gajan here would work with our software clients 00:06:59.000 --> 00:07:01.740 and we find that this makes for a smoother claim 00:07:01.740 --> 00:07:04.800 process. Everyone's understanding the sort of 00:07:04.800 --> 00:07:06.980 nature of the projects and it means that we can 00:07:06.980 --> 00:07:10.420 get claims produced in a much quicker time than 00:07:10.420 --> 00:07:12.920 say if it was... someone with a very different 00:07:12.920 --> 00:07:14.540 background that had to be upskilled in a whole 00:07:14.540 --> 00:07:17.120 new sector before being able to put forward a 00:07:17.120 --> 00:07:19.019 claim there. Yeah, it's actually very interesting 00:07:19.019 --> 00:07:21.220 you say that, James, because I have had clients 00:07:21.220 --> 00:07:24.019 come to me potentially from other providers who 00:07:24.019 --> 00:07:27.579 say one of their main changing points that they 00:07:27.579 --> 00:07:30.800 came over to us was because they felt that their 00:07:30.939 --> 00:07:34.079 work wasn't being appropriately reflected or 00:07:34.079 --> 00:07:36.019 they just didn't have the technical expertise 00:07:36.019 --> 00:07:39.959 to reflect to HMRC what the R &D was. So it definitely 00:07:39.959 --> 00:07:42.379 helps that we have those, you know, professional 00:07:42.379 --> 00:07:46.000 consultants trained in bespoke disciplines of 00:07:46.000 --> 00:07:47.959 science and technology to be able to actually 00:07:47.959 --> 00:07:52.019 extrapolate the data needed and to pursue this 00:07:52.019 --> 00:07:54.860 to HMRC or pursue this to HMRC in a way that 00:07:54.860 --> 00:07:58.410 both parties can understand. Okay, I was just, 00:07:58.410 --> 00:08:00.490 I'm just curious, you know, most companies, not 00:08:00.490 --> 00:08:01.910 most companies, all companies should have an 00:08:01.910 --> 00:08:03.709 accountant or someone who does their, you know, 00:08:03.970 --> 00:08:06.250 their accounts. Do they already do that? Is it 00:08:06.250 --> 00:08:07.990 a part of the service to include or not really? 00:08:08.110 --> 00:08:10.029 Or you actually need a specialist like you guys? 00:08:11.110 --> 00:08:13.930 Yeah, accountants certainly do offer R &D tax 00:08:13.930 --> 00:08:16.829 as a service. Some of them do and I would say 00:08:16.829 --> 00:08:19.290 that the numbers offering it are are falling 00:08:19.290 --> 00:08:23.089 in response to greater scrutiny from HMRC that 00:08:23.089 --> 00:08:25.170 many of them don't have the internal processes 00:08:25.170 --> 00:08:28.910 to be able to meet that scrutiny head on. I think 00:08:28.910 --> 00:08:30.550 the best way of looking at it is obviously your 00:08:30.550 --> 00:08:33.850 accountant is a generalist, they have a wide 00:08:33.850 --> 00:08:36.049 variety of specialisms but they're not technical 00:08:36.049 --> 00:08:38.429 experts and therefore they sometimes struggle 00:08:38.429 --> 00:08:42.889 to be able to certainly support R &D projects 00:08:42.889 --> 00:08:46.220 with a technical narrative. that is required 00:08:46.220 --> 00:08:50.700 from HMRC's standpoint to be able to enable this 00:08:50.700 --> 00:08:54.000 funding and to kind of release the benefit. HMRC 00:08:54.000 --> 00:08:55.840 obviously have a team that scrutinizes these 00:08:55.840 --> 00:08:59.100 claims. If they've not been put forward in a 00:08:59.100 --> 00:09:01.539 manner that meets all of their guidelines, then 00:09:01.539 --> 00:09:03.659 there's a much higher chance of a claim going 00:09:03.659 --> 00:09:06.799 into an inquiry. So that's typically why a client 00:09:06.799 --> 00:09:09.720 would use a specialist. They would use us rather 00:09:09.720 --> 00:09:13.669 than their accountant because we're able to unearth 00:09:13.669 --> 00:09:16.610 greater R &D activities, so the claim size tends 00:09:16.610 --> 00:09:19.009 to be much larger, but also the security of the 00:09:19.009 --> 00:09:22.690 claim is greater in that we're ensuring that 00:09:22.690 --> 00:09:24.549 someone with technical expertise has put forward 00:09:24.549 --> 00:09:27.269 the claim and also that we've got an internal 00:09:27.269 --> 00:09:29.850 compliance team that are vetting the claims before 00:09:29.850 --> 00:09:32.850 they go in. And thankfully, or usefully from 00:09:32.850 --> 00:09:35.470 our perspective, our compliance team is made 00:09:35.470 --> 00:09:38.690 up of ex -HMRC inspectors and also accountants. 00:09:39.190 --> 00:09:40.850 So they've been on the other side of the fence. 00:09:40.909 --> 00:09:43.529 They understand from HMRC's perspective what 00:09:43.529 --> 00:09:45.929 the rigors are and what the standards are that 00:09:45.929 --> 00:09:48.250 claims need to meet. And we are applying those 00:09:48.250 --> 00:09:51.049 own standards to the claims we submit before 00:09:51.049 --> 00:09:53.610 they even reach HMRC. So the chance of an inquiry 00:09:53.610 --> 00:09:58.649 is much lower than otherwise it would be. Nice. 00:09:59.029 --> 00:10:01.169 Well, is this really taxable when you do get 00:10:01.169 --> 00:10:04.429 it? Do you then pay taxes on it? Is the benefit 00:10:04.429 --> 00:10:09.210 taxable? Yes. For an SME claim under the R &D 00:10:09.210 --> 00:10:13.649 scheme, no, that benefit is not taxable. If you 00:10:13.649 --> 00:10:16.269 are a large company, so you claim under the RDX 00:10:16.269 --> 00:10:18.909 scheme, then the benefit is received as an above 00:10:18.909 --> 00:10:22.230 the line credit and therefore is taxable at the 00:10:22.230 --> 00:10:25.870 normal corporation tax rate. I see. Okay, interesting. 00:10:26.350 --> 00:10:29.389 You know, obviously, different companies will 00:10:29.389 --> 00:10:31.429 approach you in different stages. But let's say 00:10:31.429 --> 00:10:33.710 I'm a startup, you know, just got started, I 00:10:33.710 --> 00:10:36.950 spent a lot of my, you know, capital in, you 00:10:36.950 --> 00:10:39.090 know, trying on a new product. How does the process 00:10:39.090 --> 00:10:41.529 look like from my side as a startup to then go 00:10:41.529 --> 00:10:45.549 and approach RCK? So yeah, again, what stage 00:10:45.549 --> 00:10:49.690 actually do they approach RCK as well? That's 00:10:49.690 --> 00:10:53.960 it. Once you... if you start approaching us, 00:10:54.279 --> 00:10:56.360 then what we'll do is we'll go through our onboarding 00:10:56.360 --> 00:10:59.519 process. Again, a commercial executive will be 00:10:59.519 --> 00:11:03.820 in touch and try and get you onboarded. Our electric 00:11:03.820 --> 00:11:08.320 engagement is complete, which makes both parties... 00:11:08.320 --> 00:11:11.379 bound but also you know to protect both any data 00:11:11.379 --> 00:11:14.940 transfer etc. After that approach then you'll 00:11:14.940 --> 00:11:16.960 be you know on board with your consultant as 00:11:16.960 --> 00:11:20.179 well and this is when the technical side of things 00:11:20.179 --> 00:11:24.820 becomes more prevalent. I've worked, how we've 00:11:24.820 --> 00:11:27.659 worked with, let's say, startup companies is 00:11:27.659 --> 00:11:30.279 we go through the process alongside with them 00:11:30.279 --> 00:11:33.299 because we feel like the R &D is currently ongoing 00:11:33.299 --> 00:11:36.519 because you can, I'm not sure if you're aware, 00:11:36.679 --> 00:11:38.919 we've made this clear before, but you can claim 00:11:38.919 --> 00:11:41.879 back two years retrospectively. So we can look 00:11:41.879 --> 00:11:44.440 back at previous years. Startups tend not to 00:11:44.440 --> 00:11:46.600 have this. They may have been just incorporated 00:11:46.600 --> 00:11:48.919 or they've already claimed for the retrospective 00:11:48.919 --> 00:11:52.059 years, et cetera. So what we can do is we can 00:11:52.059 --> 00:11:54.700 take a approach where we introduce your technical 00:11:54.700 --> 00:11:57.940 leads mostly through teams and get the majority 00:11:57.940 --> 00:11:59.779 of the data so we can write our technical narrative 00:11:59.779 --> 00:12:04.440 or we can take a more holistic approach and break 00:12:04.440 --> 00:12:08.659 down their R &D as they occur it. I mean the 00:12:08.659 --> 00:12:10.419 process is very flexible and it's very client 00:12:10.419 --> 00:12:13.379 orientated we all appreciate obviously you're 00:12:13.379 --> 00:12:16.860 going to find some different timelines you know 00:12:16.940 --> 00:12:20.340 busy times of the month etc. So it is a flexible 00:12:20.340 --> 00:12:22.019 process. We try and get claims turned around 00:12:22.019 --> 00:12:25.340 quickly but that's for your benefit but at the 00:12:25.340 --> 00:12:27.440 end of the day it's a flexible process. And if 00:12:27.440 --> 00:12:29.340 a lot of your audience are say at the startup 00:12:29.340 --> 00:12:32.379 phase they've maybe not finished their first 00:12:32.379 --> 00:12:34.659 kind of year of trading yet, we would still encourage 00:12:34.659 --> 00:12:37.200 them to get in touch with us at this stage because 00:12:37.200 --> 00:12:40.820 our consultants can offer some advice, some guidance 00:12:40.820 --> 00:12:44.720 on how to structure activities, how to record 00:12:45.919 --> 00:12:49.639 costs and projects in real time. So it does mean 00:12:49.639 --> 00:12:51.399 that when it comes to doing that first claim, 00:12:51.419 --> 00:12:53.779 which typically happens once the first year's 00:12:53.779 --> 00:12:56.179 accounts have been finalized, that information 00:12:56.179 --> 00:12:58.399 that's needed is more readily available. They 00:12:58.399 --> 00:13:00.659 don't have to think back to what they were doing 00:13:00.659 --> 00:13:03.720 18 months ago. They've actually captured a lot 00:13:03.720 --> 00:13:07.100 of those relevant qualifying projects at the 00:13:07.100 --> 00:13:09.039 time. So we can just retrieve those. And it does 00:13:09.039 --> 00:13:10.980 mean that actually putting the claim together 00:13:10.980 --> 00:13:13.759 is a lot smoother and quicker for all parties 00:13:13.759 --> 00:13:18.539 involved. It's definitely more encouraged to 00:13:18.539 --> 00:13:21.059 do the process as and when it's fresh in your 00:13:21.059 --> 00:13:23.600 mind, rather than look back retrospectively. 00:13:23.779 --> 00:13:25.019 I mean, I can't even remember what I had for 00:13:25.019 --> 00:13:28.899 lunch yesterday. So yeah, it's good to do it 00:13:28.899 --> 00:13:31.399 during the process. And obviously, as James said, 00:13:31.419 --> 00:13:35.240 we can help and guide as relevant. Interesting. 00:13:36.200 --> 00:13:38.480 Actually, I come across this every once in a 00:13:38.480 --> 00:13:40.840 while, which is if I'm a company from abroad 00:13:40.840 --> 00:13:42.860 and I'm just going to establish myself in the 00:13:42.860 --> 00:13:46.059 UK, even though I actually need to spend money 00:13:46.059 --> 00:13:49.000 in the UK doing R &D to then apply for the scheme. 00:13:51.090 --> 00:13:55.470 How we qualify costs is costs that have been 00:13:55.470 --> 00:13:58.809 incurred by the UK counterpart or the UK limited 00:13:58.809 --> 00:14:02.509 companies. So any costs incurred in that period 00:14:02.509 --> 00:14:06.029 for that UK counterpart. Even if they are subcontracting 00:14:06.029 --> 00:14:09.830 expenditure or they have recharged costs to their 00:14:09.830 --> 00:14:12.250 foreign counterparts, we can include those costs 00:14:12.250 --> 00:14:14.269 as long as these go through the profit and loss 00:14:14.269 --> 00:14:17.740 of the UK counterpart. There are more, obviously, 00:14:17.840 --> 00:14:19.440 that's quite a simplistic approach. There is 00:14:19.440 --> 00:14:21.659 more technicalities involved. I'll go into that 00:14:21.659 --> 00:14:24.980 before you hear. But basically, if the UK companies 00:14:24.980 --> 00:14:28.500 incur in these intangible costs, we can claim 00:14:28.500 --> 00:14:30.580 for that as well with the UK companies. Okay, 00:14:30.620 --> 00:14:33.379 so I'm very curious. What's the best success 00:14:33.379 --> 00:14:35.919 story you've had so far? What do you can tell 00:14:35.919 --> 00:14:37.860 about? I don't know if there's like, you know, 00:14:38.039 --> 00:14:42.200 NDA, you can... Yeah, well, obviously, we can't 00:14:42.200 --> 00:14:45.320 name clients. Just tell me like a really good 00:14:45.320 --> 00:14:49.019 story. Okay, I can take this one. Yeah, all right, 00:14:49.039 --> 00:14:51.899 go on. So if you're looking in the software side 00:14:51.899 --> 00:14:54.220 of things, I've got a company, I've been working 00:14:54.220 --> 00:14:56.740 with them for a couple of years now. The R &D 00:14:56.740 --> 00:15:00.019 has really helped them out. They were loss making, 00:15:00.340 --> 00:15:02.500 so they received it all in the form of a credit, 00:15:02.659 --> 00:15:07.139 so cash. They also had Innovate UK grant, so 00:15:07.139 --> 00:15:09.200 part of it actually went through the ARDIC scheme. 00:15:09.779 --> 00:15:12.159 Again, this is where providers can come in to 00:15:12.159 --> 00:15:14.419 help split between ARDIC and SME because some 00:15:14.419 --> 00:15:17.480 companies can fall into both. But anyway, so 00:15:17.480 --> 00:15:19.720 they do very cutting -edge stuff, in my opinion, 00:15:20.159 --> 00:15:21.779 very novel stuff. I don't want to go too much 00:15:21.779 --> 00:15:23.799 into it, but it's in the extended reality kind 00:15:23.799 --> 00:15:27.360 of world. I mean, as they're incurring this loss, 00:15:27.559 --> 00:15:31.259 this R &D credit has exponentially allowed them 00:15:31.259 --> 00:15:33.980 to carry on their business and grow their business. 00:15:34.659 --> 00:15:37.259 Most of their funding, they don't make any sales, 00:15:37.279 --> 00:15:39.480 so all their funding comes from these grants. 00:15:40.320 --> 00:15:43.240 tax release, such as this. There's credit, obviously, 00:15:43.279 --> 00:15:46.279 from R &D. So yeah, and they're going for the 00:15:46.279 --> 00:15:48.700 future. They've just put their most recent claim 00:15:48.700 --> 00:15:51.519 in, which is their biggest claim yet, as of yet, 00:15:51.620 --> 00:15:53.620 which indicates their growth. Yeah, it's really 00:15:53.620 --> 00:15:56.580 good that UK startups and companies, you know, 00:15:56.720 --> 00:15:58.240 innovated. That's what the scheme was here for. 00:15:58.500 --> 00:16:01.179 So yeah, it's good to hear them. They contact 00:16:01.179 --> 00:16:03.679 me on a daily basis as well, just to just ask 00:16:03.679 --> 00:16:06.519 how I am. I'm a busy man. They need to know that. 00:16:06.980 --> 00:16:10.220 But no, it's really good. Are there any industry 00:16:10.220 --> 00:16:14.840 where you cannot touch them, like gambling? Obviously, 00:16:15.080 --> 00:16:16.360 there's always the red ones, right? The ones 00:16:16.360 --> 00:16:18.299 you cannot, most people don't want to touch, 00:16:18.460 --> 00:16:20.379 which is gambling and other stuff. What about 00:16:20.379 --> 00:16:22.159 crypto? Because there's a lot of innovation. 00:16:22.360 --> 00:16:24.019 Crypto and blockchain, is that something that 00:16:24.019 --> 00:16:27.480 you can apply for? We've certainly got clients 00:16:27.480 --> 00:16:30.399 in the crypto space, and actually we do in the 00:16:30.399 --> 00:16:32.440 gambling space. Funny you should mention that. 00:16:32.679 --> 00:16:35.500 Obviously, if it's grounded in software development, 00:16:36.039 --> 00:16:39.000 the actual... what the software is used for is 00:16:39.000 --> 00:16:40.820 sort of irrelevant when it comes to R &D tax. 00:16:41.039 --> 00:16:43.659 If you're carrying out the R &D activities, then 00:16:43.659 --> 00:16:46.759 yes, you're eligible to claim. One of our big 00:16:46.759 --> 00:16:50.440 success stories actually is a software company 00:16:50.440 --> 00:16:52.799 that did serve the gambling industry or do serve 00:16:52.799 --> 00:16:56.700 the gambling industry. they had experienced an 00:16:56.700 --> 00:17:00.240 HMRC inquiry into their R &D claim through another 00:17:00.240 --> 00:17:03.500 provider had submitted their claim and a sizeable 00:17:03.500 --> 00:17:06.400 one, we're talking a number of millions of pounds 00:17:06.400 --> 00:17:09.700 that was locked up in this inquiry for over two 00:17:09.700 --> 00:17:12.859 years and they instructed us to come in and kind 00:17:12.859 --> 00:17:16.500 of save the day and actually after a few rounds 00:17:16.500 --> 00:17:19.539 of correspondence with HMRC we were able to defend 00:17:20.009 --> 00:17:22.369 the vast majority of that claim and secure the 00:17:22.369 --> 00:17:25.269 funds for them, which have then been reinvested 00:17:25.269 --> 00:17:29.049 into R &D. We do their claims every year and 00:17:29.049 --> 00:17:31.130 we've seen their claims grow thereafter. And 00:17:31.130 --> 00:17:34.009 they're doing some really interesting work in 00:17:34.009 --> 00:17:36.150 terms of backend software development within 00:17:36.150 --> 00:17:38.910 their space. So yeah, we can certainly work in 00:17:38.910 --> 00:17:42.730 the gambling industry. Crypto, we've got some... 00:17:42.509 --> 00:17:43.690 We've got some interesting clients in crypto 00:17:43.690 --> 00:17:45.990 as well. Yeah, a lot of blockchain technologies, 00:17:46.410 --> 00:17:49.450 you know, distributed ledger technologies. Crypto 00:17:49.450 --> 00:17:53.349 is good. It's more, whatever's cutting edge is 00:17:53.349 --> 00:17:56.490 currently innovative, but that doesn't therefore 00:17:56.490 --> 00:17:59.690 rule out R &D for companies which aren't. Because 00:17:59.690 --> 00:18:03.170 at the end of the day, like I said, the guidelines 00:18:03.170 --> 00:18:06.859 are just seeking to achieve an advance. This 00:18:06.859 --> 00:18:08.660 can be through replicating what someone else 00:18:08.660 --> 00:18:11.160 has done, but you just don't have the knowledge 00:18:11.160 --> 00:18:13.119 and, well, not you, but the industry doesn't 00:18:13.119 --> 00:18:14.720 have the knowledge and the capabilities to do 00:18:14.720 --> 00:18:16.640 that. Let's say, I mean obviously Google and 00:18:16.640 --> 00:18:19.519 Amazon are inventing and innovating every day. 00:18:20.079 --> 00:18:22.480 That doesn't stop a startup from mimicking what 00:18:22.480 --> 00:18:25.359 they do, but this information is guarded by trade 00:18:25.359 --> 00:18:28.460 secrets, et cetera. So the mimicry through scientific 00:18:28.460 --> 00:18:30.799 or technological means which are different, the 00:18:30.799 --> 00:18:32.779 duplication of existing services and products, 00:18:33.099 --> 00:18:36.890 these are also examples of an advice. in the 00:18:36.890 --> 00:18:40.430 eyes of HMRC, which is often overlooked, we feel, 00:18:40.690 --> 00:18:43.509 and that's why the provider can come in, convey 00:18:43.509 --> 00:18:46.910 this argument in a way which is eligible for 00:18:46.910 --> 00:18:50.190 R &D for the thing. In terms of industry -specific 00:18:50.190 --> 00:18:53.109 stuff, some industries may be advancing science 00:18:53.109 --> 00:18:55.470 and technology. I mean, obviously there has been 00:18:55.470 --> 00:18:59.380 some bad, I wouldn't say bad press, but... erring 00:18:59.380 --> 00:19:01.980 away from what's scientific or technological. 00:19:02.180 --> 00:19:04.880 As long as you stick to a scientific or technological 00:19:04.880 --> 00:19:07.380 approach, rather than, I mean, it'd be difficult 00:19:07.380 --> 00:19:09.519 for a restaurant to claim they're making a scientific 00:19:09.519 --> 00:19:12.299 or technological advance. They could be doing 00:19:12.299 --> 00:19:15.500 R &D in their own sense, but it's not, if it's 00:19:15.500 --> 00:19:17.940 not in the realms of science or technology, if 00:19:17.940 --> 00:19:19.519 it's not in a field of science or technology, 00:19:19.859 --> 00:19:22.680 then, I mean, it's not eligible for an R &D claim. 00:19:23.299 --> 00:19:27.240 Interesting. Because I'm just thinking, what 00:19:27.240 --> 00:19:29.890 about the team itself? Do you have to fit certain 00:19:29.890 --> 00:19:32.170 criteria for your team to be able to qualify 00:19:32.170 --> 00:19:35.569 for this? Or anyone can apply as long as they're 00:19:35.569 --> 00:19:37.549 actually building something in scientific or 00:19:37.549 --> 00:19:42.819 tech? So yeah, HMRC asked for the R &D activity 00:19:42.819 --> 00:19:45.039 to be conducted or led by competent professionals. 00:19:45.339 --> 00:19:48.099 So competent professionals are people with either 00:19:48.099 --> 00:19:49.940 industry experience, professional experience, 00:19:50.519 --> 00:19:53.559 or even stuff like university degrees, etc. If 00:19:53.559 --> 00:19:56.180 you obviously don't have certain competencies, 00:19:56.180 --> 00:19:58.740 it's very difficult to argue that you're undertaking 00:19:58.740 --> 00:20:01.819 R &D in a field of science and technology. But 00:20:01.819 --> 00:20:03.619 competent professionals is a very key category 00:20:03.619 --> 00:20:06.099 and it is something that HMRC are looking for 00:20:06.099 --> 00:20:08.859 more and more. That comes with feedback. by getting 00:20:08.859 --> 00:20:11.599 back from obviously from other inquiries etc. 00:20:12.900 --> 00:20:15.819 But that's generally it. The Compton Fresh noise 00:20:15.819 --> 00:20:20.819 is a strong criteria. Interesting. What was the 00:20:20.819 --> 00:20:25.019 worst story you have to tell us? Like the ones 00:20:25.019 --> 00:20:26.440 you really thought you know this is not going 00:20:26.440 --> 00:20:28.259 to happen and then eventually it turned out okay. 00:20:34.199 --> 00:20:37.119 Do you mean the cases of one that we didn't think 00:20:37.119 --> 00:20:40.099 there would be R &D and then we found it or more? 00:20:40.599 --> 00:20:43.660 Exactly. No, the cases where you thought there's 00:20:43.660 --> 00:20:45.720 nothing here and then you start doing some research 00:20:45.720 --> 00:20:47.519 and you actually transfer them into a success 00:20:47.519 --> 00:20:50.940 story. You mentioned the gambling one, which 00:20:50.940 --> 00:20:52.380 was quite interesting because they had a lot 00:20:52.380 --> 00:20:56.579 of software, something like that. Well, the thing 00:20:56.579 --> 00:20:59.440 is we tend to do a lot of due diligence on our 00:20:59.440 --> 00:21:02.299 clients before we onboard them. So obviously 00:21:02.299 --> 00:21:05.460 we wouldn't start the claim process unless we 00:21:05.460 --> 00:21:08.579 were very confident there was going to be eligibility 00:21:08.579 --> 00:21:12.759 there. Especially as we're the ones defending 00:21:12.759 --> 00:21:17.019 the claims as well, if an inquiry response comes 00:21:17.019 --> 00:21:19.720 in. We also want to be confident that on both 00:21:19.720 --> 00:21:22.720 sides of the... on the client side and our side 00:21:22.720 --> 00:21:25.059 that the claim is as secure as possible. I have 00:21:25.059 --> 00:21:27.779 had clients where I've thought they've had R 00:21:27.779 --> 00:21:30.500 &D, but then the significance got progressively 00:21:30.500 --> 00:21:32.380 more and more and the advance got actually a 00:21:32.380 --> 00:21:35.460 lot more technical once we delved into it. That 00:21:35.460 --> 00:21:38.299 tends to be a dividing line. And also it's worth 00:21:38.299 --> 00:21:40.140 mentioning, which a lot of people are slightly 00:21:40.140 --> 00:21:45.480 unaware of, so mathematics is now considered 00:21:45.480 --> 00:21:48.440 a field of science and technology. associated 00:21:48.440 --> 00:21:51.240 with our new tax relief or eligible for beginning 00:21:51.240 --> 00:21:54.180 1st April 2023, accounting periods beginning 00:21:54.180 --> 00:21:58.539 on or after 1st April 2023. This was not prior 00:21:58.539 --> 00:22:02.039 to this date but now we can also claim for people 00:22:02.039 --> 00:22:06.240 doing mathematical sciences. Yeah, equations, 00:22:06.480 --> 00:22:09.900 you know, quants do it a lot as well. Equations, 00:22:10.460 --> 00:22:13.420 methodologies, processes in the field of mathematics 00:22:13.420 --> 00:22:16.819 to optimize processes, efficiencies, financial 00:22:16.819 --> 00:22:19.180 data, etc. So a bank could actually buy from 00:22:19.180 --> 00:22:21.279 some R &D if they're developing a new formula 00:22:21.279 --> 00:22:23.279 to create, I don't know, some financial product, 00:22:23.299 --> 00:22:26.319 for example. Yeah, I mean, definitely. It's an 00:22:26.319 --> 00:22:27.920 innovative approach. I mean, we've claimed for 00:22:27.920 --> 00:22:29.619 banks currently as well, but on their software 00:22:29.619 --> 00:22:34.720 side of things. especially fintech banks, do 00:22:34.720 --> 00:22:37.259 a lot of heavy development on their fintech side 00:22:37.259 --> 00:22:40.099 of things. Yeah, certainly we do a lot of work 00:22:40.099 --> 00:22:42.460 within the fintech space. We've got a couple 00:22:42.460 --> 00:22:45.619 of hedge funds actually as clients who do employ 00:22:45.619 --> 00:22:47.900 a team of quantitative developers. And yeah, 00:22:47.940 --> 00:22:52.079 it's the algorithms they're building, which we 00:22:52.079 --> 00:22:55.119 can claim on. Some really interesting work going 00:22:55.119 --> 00:22:58.180 on there. So I guess AI will be ripe for you 00:22:58.180 --> 00:23:00.400 guys, right? Anything to do with AI is just the 00:23:00.400 --> 00:23:04.500 perfect claim. That's great. Anything in depth 00:23:04.500 --> 00:23:09.480 in technology is more juicy. I like it, but HMRC 00:23:09.480 --> 00:23:13.859 like to see any technology. That's what the scheme 00:23:13.859 --> 00:23:16.859 is about. AI is obviously a new and developing 00:23:16.859 --> 00:23:20.220 technology in the government. are very keen that 00:23:20.220 --> 00:23:24.099 businesses in the UK are at the forefront of 00:23:24.099 --> 00:23:25.920 this and they're the ones who are pioneering 00:23:25.920 --> 00:23:27.940 these new technologies which are going to be 00:23:27.940 --> 00:23:30.500 so important in terms of how we live our day 00:23:30.500 --> 00:23:33.099 -to -day lives going forward. So they absolutely 00:23:33.099 --> 00:23:35.750 want to incentivise. companies in those spaces 00:23:35.750 --> 00:23:39.609 in the UK. London has got a great tech hub where 00:23:39.609 --> 00:23:43.769 we are the world leaders when it comes to fintech. 00:23:44.130 --> 00:23:47.450 We're doing really well in AI and I think any 00:23:47.450 --> 00:23:51.029 government should be looking to encourage UK 00:23:51.029 --> 00:23:53.490 businesses to grow in these spaces. It will help 00:23:53.490 --> 00:23:57.150 the UK economy as we head into the next few decades. 00:23:58.569 --> 00:24:01.130 Is there any area that you feel has been overlooked? 00:24:01.490 --> 00:24:07.220 Through the R &D scheme? Well, I think if we're 00:24:07.220 --> 00:24:10.240 looking at a macro level, the government in response 00:24:10.240 --> 00:24:14.220 to some, well, significant amounts of fraud and 00:24:14.220 --> 00:24:17.359 error in the R &D scheme did change the rates 00:24:17.359 --> 00:24:19.299 you can claim at. And there have been some technical 00:24:19.299 --> 00:24:22.880 changes to the R &D scheme. Certainly for SME 00:24:22.880 --> 00:24:25.920 businesses, R &D claims going forward are slightly 00:24:25.920 --> 00:24:29.059 less lucrative than they used to be. And I would 00:24:29.059 --> 00:24:33.480 suggest that I completely understand why they 00:24:33.480 --> 00:24:36.140 made that change, but there's perhaps an overcorrection 00:24:36.140 --> 00:24:38.920 there, and it does mean that there are really 00:24:38.920 --> 00:24:42.160 strong businesses in the UK that R &D is a core 00:24:42.160 --> 00:24:45.079 part of what they do that have suffered as a 00:24:45.079 --> 00:24:47.460 result of companies claiming that shouldn't have 00:24:47.460 --> 00:24:50.519 been claiming. There was a very positive step 00:24:50.519 --> 00:24:52.880 from the government at the last budget when they 00:24:52.880 --> 00:24:54.839 announced that there would be an R &D intensive 00:24:54.839 --> 00:24:57.160 scheme to replace the kind of old SME scheme. 00:24:57.240 --> 00:24:59.819 And it does mean now that actually those businesses 00:24:59.819 --> 00:25:03.759 in sectors like AI, fintech, machine learning, 00:25:04.039 --> 00:25:06.819 biotech will still be able to claim at the higher 00:25:06.819 --> 00:25:09.440 rates. So it's good that they kind of they have 00:25:09.440 --> 00:25:12.529 corrected what I think was a... a sort of inaccuracy 00:25:12.529 --> 00:25:14.789 there. But it'll be very interesting to see what 00:25:14.789 --> 00:25:16.849 the next government do with the scheme, whether 00:25:16.849 --> 00:25:19.789 there'll be any changes that come in. What are 00:25:19.789 --> 00:25:23.500 your unique USPs? Yeah, look, this is a crowded 00:25:23.500 --> 00:25:25.700 marketplace, I would say, for R &D advice. Obviously, 00:25:25.720 --> 00:25:27.319 you've got lots of accountants that do offer 00:25:27.319 --> 00:25:29.660 these services and lots of specialists such as 00:25:29.660 --> 00:25:32.579 ourselves. I think what has stood us apart and 00:25:32.579 --> 00:25:35.920 has meant that we've grown so quickly, you know, 00:25:35.920 --> 00:25:37.940 we've had rapid growth over the last four years, 00:25:37.960 --> 00:25:41.779 we're up to about 100 employees now, is we devised 00:25:41.779 --> 00:25:45.299 a sort of self -regulatory method, self -regulatory 00:25:45.299 --> 00:25:47.720 process backed by a compliance team and we did 00:25:47.720 --> 00:25:50.019 this before any of our competitors. Now, what 00:25:50.019 --> 00:25:53.029 this essentially means is all of the claims that 00:25:53.029 --> 00:25:55.589 we are preparing are then independently vetted 00:25:55.589 --> 00:25:58.990 by someone with a sort of compliance background, 00:25:59.130 --> 00:26:01.650 someone who has worked at HMRC understands what 00:26:01.650 --> 00:26:05.890 their guidelines are intricately and can ensure 00:26:05.890 --> 00:26:08.589 that we are adapting our approach so that the 00:26:08.589 --> 00:26:10.849 chance of a claim going into inquiry are much 00:26:10.849 --> 00:26:13.549 lower. Clients have got a lot more peace of mind 00:26:13.549 --> 00:26:17.029 in terms of knowing that whatever we're claiming 00:26:17.029 --> 00:26:19.460 for. chances are that that's going to go through 00:26:19.460 --> 00:26:22.519 without any extra sort of pushback from HMRC. 00:26:23.200 --> 00:26:26.259 And interestingly, this method is one that really 00:26:26.259 --> 00:26:28.500 attracted the ex -Chancellor, Lord Hammond, to 00:26:28.500 --> 00:26:31.259 our business. Philip Hammond joined as a senior 00:26:31.259 --> 00:26:34.000 advisor about a year ago. This was covered, I 00:26:34.000 --> 00:26:36.519 think, in the Times newspaper in an interview 00:26:36.519 --> 00:26:39.279 with him where he made reference to the fact 00:26:39.279 --> 00:26:42.880 that R &D tax whilst he was Chancellor was a 00:26:42.880 --> 00:26:45.799 really big pain point for the Treasury. They 00:26:45.799 --> 00:26:48.119 knew that there was a fraud and error going on. 00:26:49.019 --> 00:26:50.900 A lot of it is down to it not being as a regulated 00:26:50.900 --> 00:26:53.759 market. So he really liked our self -regulatory 00:26:53.759 --> 00:26:57.200 approach and he hoped that his... his role with 00:26:57.200 --> 00:26:59.720 the firm and this sort of subsequent media attention 00:26:59.720 --> 00:27:03.240 that that would garner would encourage more companies 00:27:03.240 --> 00:27:05.359 to adopt a similar approach and all of this would 00:27:05.359 --> 00:27:07.759 clean up the R &D scheme which obviously then 00:27:07.759 --> 00:27:11.210 means that you know businesses can can sort of 00:27:11.210 --> 00:27:13.470 make use of it and it can effectively do what 00:27:13.470 --> 00:27:15.670 it's designed for, which is encourage businesses 00:27:15.670 --> 00:27:19.950 to innovate in the UK and to sort of grow and 00:27:19.950 --> 00:27:23.069 attract more inward investment into the UK. So 00:27:23.069 --> 00:27:25.529 I think that kind of self -regulatory method 00:27:25.529 --> 00:27:28.609 is really what has stood us apart from our peers. 00:27:29.349 --> 00:27:31.410 If people want to reach out to you, how can you 00:27:31.410 --> 00:27:35.170 do so? Well, I believe in the notes for this 00:27:35.170 --> 00:27:37.329 podcast, there will be a link to our website. 00:27:38.170 --> 00:27:40.029 Probably the easiest way. Follow the link to 00:27:40.029 --> 00:27:42.410 our website. You can check us out on there and 00:27:42.410 --> 00:27:45.670 there is an online form you can fill in and then 00:27:45.670 --> 00:27:48.369 someone from my team will be in contact to discuss 00:27:48.369 --> 00:27:51.450 your business and how you can make use of R &D 00:27:51.450 --> 00:27:54.329 going forwards. Alternatively, you can certainly 00:27:54.329 --> 00:27:57.329 connect with me on LinkedIn. You can connect 00:27:57.329 --> 00:27:59.769 with Gadjan. Drop us a message on LinkedIn. That's 00:27:59.769 --> 00:28:01.369 absolutely fine. And we're happy to answer any 00:28:01.369 --> 00:28:05.069 questions anyone may have. And the website is 00:28:05.069 --> 00:28:10.059 rck .partners. That is correct, yeah. Wonderful. 00:28:10.619 --> 00:28:12.079 Gentlemen, it's been an absolute pleasure having 00:28:12.079 --> 00:28:14.019 you here. Thank you so much for your time. This 00:28:14.019 --> 00:28:16.759 podcast is also sponsored by startupnetworks 00:28:16.759 --> 00:28:20.339 .co .uk. Startup networks, it's an online forum 00:28:20.339 --> 00:28:22.339 where you can find all the resources you need 00:28:22.339 --> 00:28:24.880 to run your startup, from grants to investors 00:28:24.880 --> 00:28:27.039 to tips and tricks on how to be successful in 00:28:27.039 --> 00:28:30.039 your startup. This podcast is sponsored by openexpert 00:28:30.039 --> 00:28:33.339 .com. OpenExpert is a place to go if you're looking 00:28:33.339 --> 00:28:35.279 to talk with top experts from around the world. 00:28:35.369 --> 00:28:38.430 That is open -experts .com