Despite Covid and Brexit there are still opportunities out there

Despite Covid and Brexit there are still opportunities for companies which embrace innovation.

As the season changes and with our economy firmly in the eye of the storm, we must adapt to a winter we’ve never experienced before. So, is it complete madness to think there are grounds for optimism?

It may not be a wind of change just yet, more a gentle breeze and often followed with an icy Covid blast as we also batten down the hatches for the approaching Brexit tornado.

But in the Prime Minister’s speech to the Conservative Party Conference this week, he stated that the UK could not, and should not, expect a return to normal after the pandemic, describing Covid-19 as a "catalyst" for major change.

Boris Johnson claimed that despite these unprecedented hardships for individuals and businesses alike, there would be opportunities for all, improved housing and healthcare. He insisted this was not a ‘repair job’ but instead wants to see the UK as a world leader in areas such as green energy.

To this end he is pumping £160million into ports and factories to increase electricity generation from offshore wind.

Clearly there will be big opportunities for companies who are able to adapt to these strange and difficult times, companies that show resilience, and companies that engage in research and development.

My message to companies is loud and clear. If you invest in green technologies or indeed any innovative work relating to your business, then you need to make every effort to claim the benefits available to you in R&D Tax Credits.

I accept it can be hard for companies to think about anything other than firefighting at the minute. The latest findings in an economic survey from NI Chamber and BDO NI reveal the stark impact Covid-19 and Brexit uncertainty is having on Northern Ireland plc.

Despite some signs of recovery all key indicators remain negative and 50% of those surveyed either already have or plan to lay off staff. In addition, just seven percent claim to have an understanding of what future trade arrangements look like between NI and GB.

Another finding in the survey was centred on cash flow, a key indicator of business health. In Q3 this year the cash flow balances for both manufacturing and services improved but remain negative (-32% for manufacturing and -28% in services).

With cash flow under such pressure, it is worth noting a successful R&D claim could be worth tens of thousands of pounds for a company.

Latest statistics released last week from the Government’s R&D Tax Credit initiative, designed to drive innovation, revealed that Northern Ireland businesses claimed a combined £105 million in R&D Tax Credits – an increase of 40% on the previous year’s figures but still stubbornly low when compared to other regions across the UK. For example, Scottish businesses claimed £235 million.

Often companies are unaware of what qualifies for R&D work which prevents them from claiming. But no-one is asking them to cure disease or find new fuel sources, often R&D work forms part of already embedded daily operations.

With this in mind, it is always worth engaging with a specialist R&D Tax Credit consultant to conduct a thorough review of your business in order to identify claims opportunities.

The Momentum Group, specialist R&D tax credit consultants, has launched its ‘Rebound’ support service which aims to assist businesses by maximising their uptake of all available grants and R&D tax benefits offered by the UK government. We are all in this together and at Momentum we have been offering, and will continue to offer, free claims advice to companies during these pressured times.

Our specialist R&D tax credit consultants can also advise on future trends and ways you can adapt your business to suit.

As we continue to live with the financial repercussions of COVID-19 and whatever Brexit throws at us, businesses are recognising an increased need for adaptability, rethinking their current position to ensure they are best placed to maximise opportunities in what will be changing markets, trading circumstances and demands.

There must be support to help businesses through this period of uncertainty but looking strategically to the future there will be opportunities for innovation and businesses must be ready to adapt to the change that is coming.

It is vital companies engage in R&D work now to best prepare themselves for a changing landscape. The UK government has already pledged to support innovation through R&D Tax Credits.

The latest HMRC statistics on R&D Tax Credits reveal that a total of £5.3 billion was paid out to UK businesses in R&D Tax Credits so far in 2019/20, up from £4.3 billion according to statistics released this time last year.

The total number of claims stands at 59,265, with the overwhelming majority, 52,160, coming from small to medium-sized businesses.

The statistics show some real big winners with major increases in the manufacturing, construction, information & communication and professional, scientific & technical sectors. There were also significant gains for the wholesale & retail trade, repairs and admin & support services.

Construction

• The sector increased the number of claims by 1,265 from 1,790 to 3,055 with the overall value of claims to date rising from £90million to £175million, an increase of £85million.

Wholesale, retail trade, repairs

• The overall value of claims in this sector rose by £60million from £160million to £220million with the number of claims increasing from 4,790 to 6,120, a jump of 1,330.

Manufacturing

• Manufacturing had the third highest overall claims value with £595million being paid out to the sector, up from £465million the previous year and an increase of £130million. The number of claims shot up from 9,900 to 11,895, a difference of 1,995.

Information & communication

• This sector had the second highest overall claims value with £770million being paid out so far, compared to £600million the previous year, an increase of £170million. Claims increased from 10,490 to 12,165, a rise of 1,675.

Professional, scientific & technical

• The best performing sector with the biggest rise in the value of claims from £590million to £775million, a jump of £185million. Last year there were 8,165 claims compared to 10,045 so far this year, a rise of 1,880.

Admin & support services

• An increase of £30million in overall claims for this sector, rising from £130million to £160million with 2,560 claims compared to 3,085 in the latest period, an increase of 525.

The only sector to receive less money this year in overall claims was arts, entertainment and recreation with £25million being paid out in the latest period compared to £30million the previous year. However, the total number of claims rose in this sector from 440 to 625.

No-one knows exactly how COVID and Brexit are going to play out in terms of the economy but businesses here are resilient and will weather the storm. I believe there is still plenty to be optimistic about, you just have to look in the right places…

As the Byrds song said: ‘To everything turn, turn, turn.’ ‘A time to heal’ and ‘A time to build up.’

Change is coming, will you embrace it?

To learn more about R&D Tax Credits available to companies and to calculate how much you could receive visit: https://www.momentumgroupni.com/