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Identifying eligible clients in Textile Manufacturing

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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 a new 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 textile manufacturing. As with our previous subjects, the level of eligible R&D to be found in this area is misunderstood, and very often underestimated. If you know what you’re looking for, this can be a very productive area to focus on.

What to avoid

As with our previous subjects, it’s worth taking the time to first think about the types of textile companies that don’t do any eligible work. As with any manufacturing company, textile manufacturers that focus entirely on producing standard ‘fashion’ fabrics almost certainly won’t have any eligibility. Their R&D and new product development is often focussed on aesthetic effects without any real technical challenges being encountered.

In a similar vein, there are many textile companies in the UK that buy in their textiles and focus on processing this for various applications. Where this processing can be done using tried and tested techniques, you won’t find any eligibility. This applies even where, for example, a company buys in off-the-shelf products such as dyes and fabric coatings and applies them in new combinations – if these products are being used as the dye or coating manufacturer intended, then there’s unlikely to be any kind of technical advance.

Ok, so what should I look for?

So, now that we know what ineligible clothing R&D work looks like, what areas should you be focussing on?

Chemical or topical treatments

Companies developing new, high-performance coatings and topical treatments are often required to make advances in chemical science in order to achieve their aims. This can include fire retardant coatings, waterproofing or even radiation protection, and is often a response to new regulatory requirements. As long as the development of these coatings do require an advance, and the company encountered technical uncertainty along the way, then there’s a good chance of an eligible claim.

Development of new woven and non-woven fabrics

In general, the development of new fabrics, where the innovation lies in the colour, pattern or feel of the fabric, is not eligible for R&D tax relief because the desired outcome can be achieved using standard techniques. However, cutting-edge textile companies will often be working on fabrics that use non-standard or newly developed raw materials. Where this requires R&D to be done into manufacturing techniques in order to achieve the desired outcome there can be scope for making a claim for R&D tax relief.

Incorporating technology into textiles

At the very cutting edge of textile development, companies are working to incorporate advanced technologies into fabrics. For example, nanotechnology can be used to make fabrics spill resistant or reduce static without compromising the aesthetics of the materials. In addition, the increased use of biodynamic sensors and electronics in clothing has required a great deal of R&D, not least into how to make these elements resistant to wear and washing. The development of advanced textiles like these will almost certainly involve eligible R&D.

Recycled materials

Another area of focus for textile manufacturers is the incorporation of recycled materials into textiles. The increasing awareness of the environmental impact of the clothing and textile industries has led to pressure on these companies to reduce their use of more polluting raw materials and develop new materials from waste products, such as plastic bottles. Where this work requires advances to be made in chemistry and materials science there will almost certainly be eligibility for R&D tax relief.

How to write an R&D tax relief technical narrative

With HMRC’s new mandatory requirement for project descriptions on all submissions, we wanted to share our experiences to help others to write their best possible technical narratives.

Available to download here.

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