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There are a multitude of issues and challenges plaguing society at the moment and it is imperative that effective solutions be found for each and every one of them.
The relationship that we have with food is an ongoing concern, particularly as the effects of climate change may force many to dramatically alter their diets.
This has led to the Health Action Research Group (HARG) suggesting that R&D tax relief claims be reconfigured to address concerns specific to the food industry.
However, it is vital to consider the suggestions in context and determine whether anything is actually set to change for the scheme as a whole.
Should R&D tax reliefs be restructured?
It is no secret that investment breeds innovation, so it stands to reason that increasing access to funding in a targeted fashion could result in more focused research in that area.
The HARG has identified a need to create healthier food products and find ways to modify existing offerings to increase the health and wellbeing of those consuming them.
Given that healthcare is something many people struggle with and the NHS continually battles underfunding, it seems reasonable that making diets healthier could resolve several issues at once.
What is vital to note is that the HARG’s suggestions to restructure R&D tax reliefs to achieve this goal runs counter to the purpose of R&D tax reliefs.
Rather than being wheeled out as a specific weapon against a particular societal ill, R&D tax reliefs serve to support all sectors engaged in all aspects of R&D.
To begin modifying the scheme to give preferential treatment to a particular goal or endeavour would be detrimental to the efficacy of the scheme as a whole.
The broad approach enables true innovation to take place in the UK without HMRC having to consider all possible advances from all sectors or changing the criteria frequently to keep pace with shifting trends.
As such, it is unlikely that the HARG’s suggestion will yield a major overhaul, but hope is not lost for those wanting to meet the objectives laid out by the organisation.
Are R&D tax reliefs already able to support specific innovation?
The biggest reason why a restructuring would be fruitless is that many of the mechanisms are already in place.
When trying to target a specific problem, the Government are best positioned to either offer specific funding for its resolution through grants or other means or establish research hubs or infrastructure that makes advances more likely.
Historically, the inability to claim a grant and R&D tax reliefs was a major barrier to innovation that did require careful structuring to ensure that the approach to an advance was as well funded as it could be.
With that exemption removed when the Merged Scheme was established, there is now nothing stopping innovators collecting grants for a specific project and still utilising R&D tax relief claims.
In the case of HARG’s suggestion, some of the work may already qualify for R&D tax relief claims.
If a project aims to create new food products or modify existing ones to be healthier and the means to do this constitute a scientific or technological uncertainty, it will likely qualify for R&D tax reliefs.
This would not include minor modifications to recipes but could consider the ways that food is packaged and processed, treated, sterilised, pasteurised, or preserved.
Understanding the full spectrum of support for innovation is vital when making recommendations about how problems in society should be tackled but is also equally important for accountants looking to help clients with R&D.
Knowing that there are sectors that fall outside of the standard array that populate R&D tax relief claims can embolden accountants to offer their services to those who are pushing for genuine advances.
However, these projects are more likely to face HMRC scrutiny, so having an expert R&D tax consultant supporting the submission is imperative.
Our team have worked with a range of businesses in the food industry, helping them to submit fully eligible R&D tax relief claims and handle any enquiries that are launched.
We can support with enquiries into claims we have not compiled, preserving the value of all legitimate costs and working to address HMRC’s concerns around anything ineligible that may have been included.
While R&D tax reliefs are unlikely to be restructured to give preference to the food industry, giving greater access to niche sectors could help promote more innovation in the UK.
If you want to be confident in approaching the future of R&D tax reliefs, get in touch with our team today!
Adam Bointon is a Technical Director specialising in R&D Tax Credits for SMEs in manufacturing and software sectors. With over 15 years’ experience, he works closely with businesses to identify qualifying R&D activities and prepare clear, compliant claims. He combines technical expertise with a strong understanding of economics and finance to support successful outcomes. Adam also contributes to industry webinars and CPD sessions, sharing insights on R&D tax relief and HMRC requirements.
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