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“randd take the time to understand our business”

Author: Jonathan Wilde

A client for whom we have recovered over £1million in R&D tax credits has praised the “fantastic” balance struck by randd in understanding how to maximise their rebate potential.

Shropshire-based manufacturing and engineering company AV Birch Ltd has worked with randd to submit its R&D tax credits claims to HMRC for 12 years – and recovered a total of £1,069,896 so far.

Barry Roberts, the company’s Finance Director, believes randd is the perfect fit to manage their R&D tax credits claims, due to our exhaustive knowledge of how the process works, combined with a thorough understanding of AV Birch’s operations.

“I think randd are fantastic in having that balance,” said Barry. “They understand the accountancy side, because it’s a complex tax issue and a service we may struggle to find locally and have a great deal of confidence in that relationship.

“Accountancy practices are very common but not every high-street accountancy practice can manage the R&D side of it, so randd come to the table in terms of understanding the tax side of things but also taking the time to understand what we do as well. It’s very rare someone would have that balance. We have a small finance team, we don’t have the in-house expertise to apply for R&D tax credits ourselves.

“Dialogue is very good – we are always kept up to date with the stage the process is at and randd work closely with our external accountants, always responsive, taking the time to explain the claim.

“It’s always a two-way discussion, with us obtaining the information and randd taking the time to understand our business.”

What does the company do?

AV Birch, which employs around 50 staff, designs and manufactures machinery across its range of seven divisions – access equipment, automation, engineering, lifting and handling, seals and hydraulics, timber engineering and timber incising.

Many of the projects on which AV Birch works are prototypes, produced to the bespoke requirements of its clients, which means research and development is a fundamental and integral part of its day-to-day operations.

One of the company’s most recent projects was the Auto Press, a machine designed to increase the efficiency and safety of securing steel plates to wooden roof trusses in the housebuilding industry.

Naturally, a sizeable amount of R&D was involved in bringing the concept to reality, starting with the design team.

“We are heavily design-focused,” explained Barry Roberts. “It’s a very collaborative process when we receive an order. Rather than it being a case of ‘can you make this? Off you go’, there can be a lot of meetings with the customer, asking ‘what exactly do you need this machine to do?’

“Quite often a customer will come to us with a product request or with a problem and say ‘I don’t know what I want to order, in all honesty, but what I do know is I have this problem, can you guys think of a way around it?

“R&D is more appropriate to some of our divisions than others in terms of the type of product they sell. There will be repeat sales in some divisions, which is great for us from a normal commercial point of view but not so juicy from an R&D perspective. Then we have other divisions that produce specialist engineering equipment – they barely make the same machine twice, so that’s normally better from an R&D point of view because often we are doing something for the very first time.”

What are the benefits of the company’s R&D?

The definition of R&D, of course, incorporates finding a new solution to a technical challenge, and Barry provided an insight into precisely what that comprised within the Auto Press project.

“Historically, it’s been a very manual process to set up that type of machinery,” he explained. “The return on the Auto Press is a significant drop in labour. You may previously have had eight or nine people standing around a machine, now it’s down to one or two.

“The main efficiency is speed of work, but the other gain is in safety. If we can keep manual handling to a minimum, it makes things far safer. For example, if I went up to place a plate on a roof truss by hand, and I wasn’t in synch with the person who switches on the machine, I could be in danger of serious injury.

“It’s about trying to save labour for the customer and making the process far safer because with heavy engineering equipment, it can be risky.

“Most of the work on the Auto Press was done in 2022, the machine was installed and commissioned in 2023 and we’ve just started to work on a bigger version.”

Creating the Auto Press truly fits the bill as being tailor-made for an R&D tax credits claim, which each year, with the help of randd, proves a huge benefit to AV Birch.

“The rebate we receive really helps us because you need that money to reinvest,” said Barry. “I’ve been with the company for almost five years and in that time we’ve not had to directly pay our Corporation Tax liability due to the size of the rebate.

“We are on this cycle where sometimes products mature and your R&D on a specific product will taper, but the concept of doing something for the first time rears its head year in year out, so you need that spare cash to invest.

“We always have cash tied up in projects because the Auto Press took well over a year to complete, so we have significant lead times and you need that cash buffer because you won’t invest the money today and get a return on it tomorrow. It will be tied up in work in progress for a good number of months.

“So it does make a huge difference to us.”