Something we hear time and again from our clients is that they struggle to identify clients in their client base who would be eligible to claim R&D tax relief. So, in this blog series, we’ll be digging into some less obvious sectors and discussing what to look for when assessing eligibility!
In the latest of this series, we’re looking at printing. As with our previous subjects, the level of eligible R&D to be found in this area is misunderstood, and very often overestimated. However, if you know what you’re looking for this can be a good area to look for eligible clients.
What to avoid
As with our previous subjects, it’s worth taking the time to first think about the types of printing companies that don’t do any eligible work. Printing is a very old and well-established industry, so the majority of printing companies are unlikely to have much eligibility.
As with several other sectors we’ve discussed, the likelihood of finding eligible work is closely linked to the scale of the organisation. Smaller ‘high-street’ printing companies are more likely to use off-the-shelf machinery and materials, and be producing standard prints and products, and are thus unlikely to be required to make advances in science or technology.
Moving up the scale, larger more industrial printers are slightly more likely to carry out eligible R&D, but this again will depend on how they work and the focus of their business. For example, even large companies could rely on off-the-shelf machinery, albeit larger and more complex than that used in high-street shops. Where these companies use standard inks and media in their printing, they are unlikely to have a claim for R&D tax relief.
Another key point to remember about printing projects, no matter the scale, is that work that focuses on producing aesthetically innovative designs using standard techniques is not eligible for R&D tax relief. The design and production of larger or more intricate designs that do not present engineering challenges, for example, would not require the company to make advances in science or technology.
Ok, so what should I look for?
So, now that we know what ineligible printing R&D work looks like, what areas should you be focussing on?
A big focus in printing at the moment is developing innovative methods, processes and reagents to enable direct printing onto a huge variety of substrates, from metal plates to wood panels to various types of vinyl. Many of these new substrates will react in unpredictable ways when direct printing is attempted, or, for example, may not react as expected with inks, leading to running or colour distortion. In addition, heat build-up and dissipation is a major concern in many types of printing, with non-traditional substrates shrinking or becoming misshapen when subjected to standard heat levels during printing.
Where these difficulties require advances to be made in engineering, chemistry and/or materials science in order for the printing to be achieved successfully, the company may be eligible to claim R&D tax relief.
Innovative inks and reagents
Within the printing industry, there is a continual focus on developing improved inks and reagents. Much of this centres around the work described above, where print companies want to use a variety of new substrates that cannot be successfully printed on using standard inks. Companies may also work to develop inks with increased UV resistance, or with better colour depth. Where this work goes beyond buying off-the-shelf inks and reagents and into the development of new chemical formulations, there’s a good chance the company will be able to claim R&D tax relief.
Like many other industries, the printing industry is coming under increasing pressure to reduce its environmental impact. This might mean moving away from harmful chemicals toward water-based inks, or developing improved cutting techniques and algorithms to reduce wastage.
In addition to these concerns, print companies are required to comply with government legislation around the use and disposal of materials, increased recycling of materials and reducing energy use. Where compliance with changing legislation requires advances to be made in science or technology, companies may be eligible to claim R&D tax relief.
The use of ‘smart’ labels, incorporating, for example, radio frequency ID tags, has become fairly mainstream within retail to enable more accurate tracking of stock. Including these tags and other electronic devices in printed labels continues to present challenges for printers, as retailers demand thinner or more intricate labels with undetectable electronic components. Where the produce of these labels requires the company to make advances in, for example, engineering and electronics there is a good chance it would be able to claim R&D tax relief.
R&D Eligibility Webinar
Printing will be one of the fields focused on in our upcoming Webinar: “Identifying Eligible Clients” on May 25th, 2021 at 12:30.
We’ll be discussing how to spot innovation within accountants’ client bases and across some of the most unlikely sectors in the UK. Perfect for accountants & consultants looking to cement their understanding of the R&D scheme’s applicability across the sectors they might service!
Brush up on the fundamentals of the R&D tax relief scheme
Streamline your claims processes and get expert advice on the R&D tax relief scheme.