Helping engineering firm with R&D tax claims

As a business providing precision engineering services to the aerospace, motorsports, and marine sectors across the globe, West Midlands-based engineering firm A&M EDM prides itself on its innovative, pioneering, and forward-thinking approach.  By its very nature, R&D constitutes a significant proportion of the firm’s day-to-day operations and, through embracing the Government’s R&D tax credit scheme, it has successfully claimed back more than £780,000 to date.

The scheme was introduced by the Government in 2000 in a bid to support SMEs by helping them reduce the cost of R&D activity and subsequently encouraging further innovation (a separate scheme for larger organisations was launched in 2002).  The schemes essentially enable organisations regardless of size or sector to make a tax credit claim against any R&D activity (regardless of project scope) and to receive a cash payment and/or a reduction in Corporation Tax. 

Since initial launch HMRC reports that more than £40bn has been repaid to UK businesses in the form of R&D tax relief.  For the year ended 31st March 2020 alone, the estimated number of R&D tax credit claims was 85,900, totalling £7.4bn – an increase of 19% from the previous year.  Those sectors with the greatest volume of claims (64%) continue to be Manufacturing, Information and Communication, and Scientific and Technical¹.

A&M EDM has been working alongside the team at Shropshire-based R&D Tax Claims since 2012 – a team which has extensive experience across the manufacturing and engineering industries, meaning they understand A&M EDM’s sector inside out and are able to support them to identify all eligible activity within their business – and ultimately maximise any potential tax reclaims.

Peter Roach of R&D Tax Claims, said: “As an organisation, A&M EDM is pretty unique – the range of R&D activity they undertake is phenomenal.  They’re dedicated to always looking at new and better ways of doing things, committed to evolving systems and processes rather than just ‘using’ them, and to thinking continually about ‘what’s next’.  Which is why going through the tax reclaim process has been (and continues to be) hugely beneficial to them – any money they receive from HMRC is re-invested back into the business and into further technological developments, enhanced facilities, and additional members of staff.”

The most recent R&D tax claim submitted on behalf of A&M EDM was for a number of projects – ranging from development on rotary engines to significant advances in the technical capability to use EDM and high-speed machining processes across the aerospace sector (amongst others), as well as projects involving additive manufacturing with new materials.  Each of these involved a significantly high level of development across all areas of the design and manufacturing processes.

Peter continued: “The team at A&M EDM is continually innovating, and regularly undertake multiple projects at any one time.  Our recent claim to HMRC was predominantly focused on the five-bearing engine project, for next stages of a longer term, multi-year project which saw the team design and develop a prototype five-bearing engine derived from roots in the BL ‘A’ Series.  Encompassing a full engine development of all the major components, including a double clutch, to create an extremely powerful engine system.  This has brought significant benefits to the motorsport industry due to its unique functionality and highly-advanced technology.  

“Making a successful claim involves understanding the core elements of the R&D activity and ensuring the application meets all of HMRC’s criteria, and is clearly set out for the claim’s assessors. And it’s all about that partnership with the client – constantly questioning every step of the innovation process to extract everything HMRC needs.  Is this project eligible?  In what way is it eligible?  Which specific elements do we need to evidence and document?  And, do the numbers stack up?

“We worked alongside core members of the A&M EDM team in order to gather the information we needed – primarily the company’s Managing Director Mark Wingfield who was ultimately key to driving the whole process, a number of technical personnel to bring the actual manufacturing journey to life, and the accounts team who supported us in bringing together the financial elements and building the overarching investment story.

“It’s a real partnership – the team puts absolute trust in us to put together a strong case for HMRC and they focus on what they do best – innovating, modernising, and transforming products and processes for the benefit of their customers and wider industry.  This latest claim on behalf of A&M EDM totalled £114,000 which has meant more funds being brought back into the business providing the team with the ability to take further technical risks and facilitating even more investment in new techniques and equipment – the very thing that the R&D tax claim process is designed to do.”

A&M EDM launched in 2002 as a two-person start-up, and has now grown to employ more than 70 with a turnover of £4.4m and offering one of the most expansive commercial EDM services in the country.

Mark Wingfield, Managing Director at A&M EDM, said: “Innovation is in our blood, with a commitment to continued investment absolutely key to keeping us, and our customers, ahead of the game.  

“Due to the very nature of our business, R&D activity – both product and process-based – forms a significant part of our operations, so being able to reclaim the tax back from it is hugely valuable.  We’ve been working with Peter and the team for the past ten years, and they’ve helped us to reclaim hundreds of thousands of pounds back which we’ve subsequently been able to re-invest back into the business.

“When we first heard about R&D Tax Claims and what they could do for us all those years ago we literally thought it was too good to be true.  But it wasn’t – the team does a fabulous amount of work on our behalf, and we reap the benefits!”

To find out more about R&D Tax Claims or to speak to a member of the team, please visit www.rdtaxclaims.co.uk, email mark@rdtaxclaims.co.uk or call 0845 003 0140.

¹ Research and Development Tax Credits Statistics: September 2021