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UK creative agencies missing out on cash for innovation

UK creative agencies, including public relations, are missing out on government tax credits for research and development (R&D).

Rift Group’s Julie Barry discusses a funding source that is often neglected by creative agencies in the UK.

julie-riftWho are you and what do you do?

I’m Julie Barry, head of R&D at RIFT Group. I help businesses get access to the tax credits they are entitled too.

What are tax credits?

They’re a subsidy to reward firms carrying out work that will benefit the UK economy or boost competitiveness. Think of them as a funding mechanism.

How much are these worth?

Firms can get back as much as 26p for every £1 spent on what HM Revenue & Customs (HMRC) classes as research and development (R&D). These R&D tax credits can also slash your Corporation Tax or cover any immediate costs you may have.

The average claim with SMEs we work with amounts to around £50,000.

Does R&D apply in the creative sector?

It certainly does. R&D isn’t just scientists in white coats concocting bubbling formulas or developing Bond gadgets. If your firm is streamlining a process, designing new software or building an original app, you may well be doing work recognised as R&D.

That doesn’t sound like R&D as most people think of it. Is that why creatives aren’t applying for the schemes?

Yes. We are constantly pointing out to firms that what they do is actually R&D. Often it comes as a surprise to them and we have to work hard to persuade them they are doing valid R&D.

Can you give an example?

In recent years communication organisations have built software to deal with the demands of social media and our smartphone culture.

Firms have created platforms that bring together journalist databases, customer records, social media feeds, marketing analytics and so on, and mixed them into a single tool – which can do everything from running marketing campaigns to measuring conversations.This is R&D as it’s a new solution to an existing problem.

Is this some sort of accounting or legal loophole?

No. The government actively wants people to claim. They just aren’t doing a great job of getting the message out. The more firms innovating, the better the UK’s economic health.

Does your project have to be a success to claim?

HMRC doesn’t limit the scheme to successes only as that could be counter-productive – with people focusing on safer projects.

How do people apply?

The key is to know what you are doing. Many firms have accountants who are excellent with numbers but don’t think they would be eligible for credits, so don’t apply. If nobody in your organisation has any experience it’s worth asking an agent to look.

What is your advice to anyone reading this who hasn’t thought about R&D tax credits before?

Ask yourself the following questions:

  • Have you worked on a project for which no obvious solution exists?
  • Did it require expert knowledge?
  • Did it produce an advance in technology/science?

If you find yourself answering ‘yes’ then you need to look into R&D credits.

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Stephen Waddington

Partner and Chief Engagement Officer, Ketchum and Visiting Professor in Practice, Newcastle University.

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