In this case study, we delve into the journey of Global Precision Ltd, a manufacturing business based in Yorkshire. Established in 2009, the company specialises in manufacturing components and products from plastics using injection moulding techniques. However, despite their innovative approach to projects and their reputation for tackling intricate challenges, Global Precision was missing out on a significant opportunity – Research and Development (R&D) tax relief. This case highlights how a change in perspective, combined with expert guidance, unlocked substantial tax savings for the company.
Global Precision had been working with an accountant who, despite their long-standing association, had minimal knowledge about R&D tax relief. The company’s Managing Director was under the impression that R&D tax relief wasn’t applicable to their business, and as a result, they hadn’t pursued any R&D claims. The potential benefits of such a claim seemed almost too good to be true.
Enter a new bookkeeper, who had a previous working relationship with Ascentis. As she delved deeper into Global Precision’s operations, she began to suspect that the company might be eligible for R&D tax relief. A connection was facilitated between the MD and Ascentis to explore this possibility further.
Upon careful evaluation of the company’s activities, Ascentis was confident that Global Precision qualified for R&D tax relief. To reassure the MD, who was understandably cautious given the potential tax savings, Ascentis suggested submitting the initial R&D claim to the HMRC R&D Advance Assurance Unit for pre-approval. This extra step added a layer of credibility and trust to the process.
As part of this process, we prepared a comprehensive R&D report outlining the qualifying activities and associated costs. This report was submitted to the specialised HMRC R&D unit. Subsequently, a telephone interview was arranged between the HMRC, the MD, and Ascentis to ensure mutual understanding and agreement on the claim.
The decision to explore R&D tax relief led to remarkable outcomes for Global Precision:
- Immediate Tax Savings: The first R&D claim generated a substantial corporation tax saving of £25,000 in the initial accounting period. Subsequent claims have consistently produced similar savings each year.
- Growth Benefits: As the company expanded, creating a second trading subsidiary, both entities could make R&D claims. These claims yielded tax savings on a similar scale, effectively doubling the group’s annual tax savings to approximately £50,000.
Global Precision’s journey from scepticism to substantial tax savings illustrates the power of informed decision-making. By partnering with Ascentis and exploring the possibility of R&D tax relief, the company not only secured significant immediate tax benefits but also positioned itself for continued growth. This case underscores the importance of looking beyond the obvious and seeking expert guidance to uncover hidden opportunities that can lead to transformative financial outcomes.