CD December 2015 Main Slides
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The main slide deck from COMIT's winter community day held in High Wycombe and hosted by IFS
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CD December 2015 Main Slides
- 1. COMIT Community day 3rd December 2015 ‘Industry Enriches’
- 2. Housekeeping
- 3. 3 WELCOME TO IFS Kenny Ingram Global Industry Director Construction, Engineering & Infrastructure Kenny.ingram@ifsworld.com +44 7764565556
- 4. ● 29 miles (47km) north of Charing Cross Station in London ● Nothing “High” about it… it’s in a valley ● Home of Benjamin Disraeli (UK Prime Minister in 1868 and from 1874-1880) ● Biggest Industry: Chair Making - Home of the Windsor Chair ● Home of RAF Bomber Command 1940-1968, ● USAAF 8th Bomber Command HQ 1942-1945 4 IFS HIGH WYCOMBE OUR LONDON OFFICE???
- 5. Wireless access #COMITDAY Network - IFS Guest WPA Key - wpaifs14 Username – guest12 Password – XMS-378
- 6. Agenda Time Item Presenter 09.30 Tea and Coffee on Arrival 10.00 - 10.15 Introductions and thoughts from the Directors Welcome from our host, IFS Welcome to new members and guests 10.15 – 10.45 Robotic Drilling George Holder (Costain) 10.45 – 11.30 ‘Internet of Things’ CAT detectors Cable Detection (Leica Geosystems) 11.30 – 11.50 Coffee Break and networking 11.50 – 12:10 “Rapid Site Deployment – Day One Connectivity” Jade Harris & Lee Garret (Westbase) 12:10 – 13:00 Workshop Tim Gardom (City Insights) 13:00 – 14:00 Lunch and networking 14:00 – 15.10 IFS - showcase 15.10 – 15.50 Ten minute technologies 1. Tax breaks for R & D 2. Graduate feedback 3. Tuxford Trial 4. Plain Language Questions Tony Shooter Harrison O’Hara Ray Dudding Iain Miskimmin 15.50 – 16.00 AOB, admin and close.
- 7. Meet the Old & New Chairmen... Tony Shooter Chair for Technology Steve Slater Joint Chair for Construction Stephen Smith Joint Chair for Construction
- 8. Thoughts from the Chairman Crossrail Innovate18 Time to get on board the Crossrail train….
- 10. CPD Accreditation COMIT PROJECTS LTD Provider No: 41010
- 12. Welcome to our new (ish) members
- 13. Welcome to our Guests Kier TfL Cedar Bay Leica-Geosystems Panasonic
- 14. COMIT Fellowship John Findley Dr Sarah Bowden Outstanding contribution to the COMIT community Philip Jackson
- 15. George Holder. C610 Systemwide. ATC (Costain). SEMI-AUTOMATED DRILLING MACHINE 3rd Dec 2015
- 16. Cable Avoidance Evolution and innovation COMIT – 3rd December 2016
- 17. Tea and Coffee
- 18. Rapid Site Deployment Day One Connectivity Jade Harris & Lee Garret Westbase
- 19. Workshop
- 22. Ten Minute Tech
- 23. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. • R&D Tax Relief - Past (Can claim 2 years from the end of an accounting period) • R&D Grants - Present • Patent Box - Future R&D Tax Relief - Our extended R&D service!
- 24. Abbey Tax is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. R&D is not!
- 25. R&D tax Relief in a Nutshell R&D is work to resolve a scientific or technological uncertainty aimed at achieving an advance in science or technology. Based on a competent professional’s own view
- 26. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. • Making an advance • Overcoming technological uncertainties. • Projects which are not readily deducible by a competent professional. R&D: The Three Boxes to Tick
- 27. 1. Advancement? It doesn’t have to be!
- 28. Advancement? it could simply be! £ £
- 29. 2. Uncertainties
- 30. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. • The projects cannot be based around known knowledge. • There must be technical ‘blind alleys’ involved Technological Uncertainty
- 31. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. • How can we demonstrate something is not readily deducible? • As a general rule, projects should last at least 3 months, as this demonstrates a degree of technical difficulty. • The work should be performed by competent professionals in their own field of work. Not Readily Deducible
- 32. A Simple Questionnaire If the answer is “YES” to ANY of the questions then the company may be able to claim substantial cash back from HM Revenue & Customs. • Does the company undertake the development of new products / processes? • Is the company creating new or improved products? • Is the company aiming to duplicate existing products or processes in an appreciably improved way? • Has the company made advancements in its field of work? • Does the company employ technical staff, engineers, software developers or scientists? • Does the company spend money on staff costs, consumables and / or sub contractor costs in order to undertake the development work?
- 33. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. Hidden Opportunities within these sectors
- 34. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. Grants versus R&D Tax Relief
- 35. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. • Staff costs for those involved with R&D (ideas capture, technical feasibility, proof of concept, modelling design, prototyping, development, testing, project management etc.) • Consumables (items used in the process) • Software costs (e.g. CAD / MSDN / MS Project licences) • Light, heat and power costs (a proportion of) • Subcontractor costs (65% qualifies) – (not for large companies) Qualifying R&D Costs
- 36. The rewards depend on what size you are? SME or Large
- 37. What is an SME for R&D purposes? • Old limits – Fewer than 250 employees AND – Turnover less than €50m, OR – Balance sheet less than €43m • New limits, effective from 01/08/08 – Fewer than 500 employees AND – Turnover less than €100m, OR – Balance sheet less than €86m
- 38. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. • SME entities will receive an additional 130% from 1 April 2015 tax relief on the costs identified. • Large companies are eligible for an additional 30% tax relief • Therefore an SME spending £100k per annum on R&D will receive an extra £130k of tax relief. At the SME tax rate of 20%, this is worth approximately £26k in tax savings. • Loss making companies can also claim a tax credit at 14.5%. • Eligible to claim for the last two complete financial years. Tax Relief Available
- 39. R&D Tax Relief – HMRC keep extending • Widening of the definition • Increase in relief for SMEs from 150% to 230% • Abolishment of the £10,000 minimum spend on R&D • Abolishment of the PAYE/NI liability cap for R&D tax credit payments • Increase in rate of tax credit from 10% to 14.5% • Introduction of RDEC so large companies can claim a tax credit
- 40. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. • From 1 April 2013 a new standalone credit (RDEC) has been introduced. • It is effectively to replace the Large company scheme. • RDEC will be become compulsory from 1 April 2016 • RDEC does not alter the way the qualifying activity or expenditure is calculated. It is only the method of giving the relief that has altered. • For the first time, large companies can now claim a cash credit and not just tax relief. • RDEC rates from 1 April 2013 – 10% • RDEC rates from 1 April 2015 – 11% RDEC (Research & Development Expenditure Credit)
- 41. Abbey+ is a trading division of Abbey Tax and Consultancy Services Limited, whose ultimate holding company is Markel Corporation. • Need More Information • Contact Neil Kirby at Kirby and Haslam • 01553761316 • E mail at neil.kirby@kirbyandhaslam.com
- 42. Graduate Feedback Feedback from the Graduate day Harrison O’Hara
- 44. Setting your Asset Information Requirements Iain Miskimmin
- 45. Plain Language Questions Organisational Information Requirements (OIR) Asset Information Requirements (AIR) Employers Information Requirements (EIR) Asset Information Model (AIM) Project Information Model (PIM) Generates Informs Contributes ? SpecifiesTests Specifies Contract ? ? Supply Chain Pre-contract BIM Execution Plan (BEP) Post-contract BIM Execution Plan (BEP) Plain Language Questions Generates Information requirements
- 46. Asset Information Requirements • How do I answer the critical questions about my asset, at each stage of its lifecycle • Strategy • Briefing • Concept • Detailed Design • Construction • Handover and commissioning • Operations • Maintenance • End of Life • Disaster Asset Information Requirements (AIR) Information requirements
- 47. Asset Data Dictionary Why create a dictionary? • Common understanding of the information requirements • Anticipation of when information is needed • How to measure/ present the information • Helps to define hierarchy and functional groupings • How assets should be physically labeled It’s an essential part of your EIR Why an asset data dictionary
- 48. Critical Questions • Pick the top 25 most common assets • Engage the “users” for each of the data drops • Identify the most common 5 questions they ask • Analyse these Critical Questions to determine • What information is needed to answer them • How the information needs to be presented Don’t loose the relationship between the questions and the information. How?
- 49. Replacement Criteria • What would it take to replace this asset? • The cost of labor • Hiring of equipment • Consumables • Possession and shut down This needs to be index linked from an ERP system How?
- 50. Performance • What is the acceptable performance of this asset? • Energy consumption • Maintenance frequency • Condition • Specific to the asset Ideally this is remotely monitored but should be part of a regular inspection regime. How?
- 51. Back to the why…
- 52. Its all about getting Better Outcomes Iain Miskimmin
- 53. 2016 Community Days Who would like to host? •Thursday 3rd March •Thursday 9th June •Thursday 8th September •Thursday 1st December
- 54. Drive Carefully See you in 2016
Hinweis der Redaktion
- My name is Ali Lynch and I am a Chartered Tax Adviser who has been specialising in R&D tax credits for the past 15 years. Our team apply for approximately £20m of tax credits a year for just about every industry but we and HMRC still recognise that companies are missing out on R&D tax credits and relief. Today, I want to try and unlock this opportunity for you and your clients and help you identify which companies are qualifying. Note that I keep mentioning companies. It is important to state at the outset that the R&D tax relief only applies to COMPANIES. The good news, however is that it does not matter whether a company is small, medium or large, profitable or loss making, whether it is receiving a grant or subsidy towards their R&D… in all these circumstances, a company can make an R&D claim! It was not so many years ago that economists proved that there was a direct correlation between R&D and productivity ( ie. the GDP of a country). With this in mind the UK government and the wider European Community is actively supporting a whole host of incentives and reliefs surrounding the promotion of R&D. This is why we look at a client with all these reliefs and incentives in mind. We have termed this as looking at the company’s past, present and future. The PAST – A company can go back 2 years to make an R&D claim. The PRESENT – We look at what grants and funding is available to enable that company to generate cash to continue developing. THE FUTURE – We look at what Intellectual property a company can register and more specifically if there is a potential for the company to take advantage of the very generous 10% tax rate under the patent box. There are separate webinars covering the topics of funding and the patent box presented by Simon Day and Mark Wood.
- So lets start off by answering possibly the hardest question when dealing with R&D tax relief. What constitutes R&D for tax purposes? It is actually easier to start with by explaining what it is not! You don’t have to have Einstein, Sir James Dyson or a team of men in white coats working in a laboratory to make a company eligible for R&D.
- To help you validate whether a company is eligible to make a claim. I will start by summarising the definition in the tax legislation and then try and put it into english. R & D is basically …………..read slide Before we begin with what the definition means in English, notice that I have underlined the word AIMED. The client sould simply be aiming to achieve something faster, smaller, cheaper. The project could actually be aborted. This is especially relevant if the project could not be completed because the technological uncertainties could not be overcome.
- So what does all that mean in English. Over the last 15 years of specialising in this subject, the easiest way that I have found to explain this tax relief is to refer to 3 tick boxes. You have to have all these 3 things ticked to make a claim for a company. You have to be making an advance, overcoming technological uncertainties and it cant be readily deducible by a competent professional how you overcome those uncertainties. But again, what does this mean in simple terms.
- So lets have a look at the 3 tick boxes in more detail; We will start off by looking at what is defined by a technological advance. Again, it is easier to explain what a technological advance is not. An advance in technology does not have to be blue sky, innovative or ground breaking. In fact I purposefully never use the word innovative when dealing with R&D claims because I think that the word is misleading to clients. Company’s do not have to be doing something innovative in order to claim. Lets not forget the whole rationale behind the legislation. The government are aiming to give an incentive for companies to increase productivity by making developments to their products. This legislation is not just about incentivising Sir James Dyson and his revolutionary dual cyclone “vacuum cleaner”. If it was only for the Einstein’s of the UK then this relief would be of little use to the wider business community and would have minimum impact on the GDP of a country. The legislation was written to have a much wider impact than just applying to innovative company’s. Firms that improve the manufacturing of existing products, design & develop new ones, change the way they are making products and/or improving processes can often be eligible. R&D is not restricted to people with wild hair in white coats. Company’s are often doing “R&D” without knowing it – and as a result are still missing out on this very generous tax relief. An advancement could be anywhere in the value chain, from raw materials through to waste, or indeed in a company’s processes. The company does not have to be developing the first ever product of its kind. The definition is wider than most company’s and general accountants perceive.
- An advancement could therefore constitute making something cheaper, smaller, larger or longer. An advance in technology occurs when a company is making an “appreciable” improvement to an existing product or process. Often this is simply duplicating an existing product or process to make it more costs effective or bespoke to a particular customers set of requirements.
- WHEN WE LOOK AT THE TECHNOLOGY UNCERTAINTIES, IT IS VERY IMPORTANT TO ASK THE COMPETENT PROFESSIONAL WHAT THE TECHNOLOGICAL UNCERTAINTIES ARE. It would be no good asking the gardner if making the product was difficult as he would not be competent in the first place of making that judgement. IF HE IS A COMPETENT PROFESSIONAL – ie HE IS LIKELY TO HAVE RELEVANT EXPERIENCE IN HIS INDUSTRY, PERHAPS QUALIFICATIONS OR AN INDUSTRY SPECIALISATION AND IF WHAT HE IS DOING IS “HARD” - THEN IT IS NOT LIKELY TO EB READILY DEDUCIIBLE HOW IS GOING TO GET THERE.
- The second tick box is “technological uncertainty” and these are probably the two most helpful words in the legislation. When we look at technological uncertainty, it is very important to ask the competent professional (who in most cases is the technical lead on the product). It would be no good asking the finance director what the technological uncertainties are as they would most likely not be competent in the first place of making that judgement. You are looking for the person with the relevant experience and expertise in the given industry. And simply ask them, “what was hard about the product”? “What were the technical ‘blind alleys’?” We see technological uncertainties in almost every industry. We see it in almost every manufacturing company eg, COST, SPACE, REGULATION, MATERIALS, WASTE. We see it in the software industry which often arises where you may be combining off the shelf predictable applications but you are dealing with integration uncertainty. We even see it in the construction industry where you may be using new materials or using known methods but in a different environment. I will go through more examples in a moment.
- So finally, the third tick box “The technological uncertainties can not be readily deducible.” How can we demonstrate that something is not readily deducible? As a general rule we sometimes like to find out how much or how long it took to overcome the technological uncertainties. If the project took a weekend or even just a week it is a pretty god indication that the technological uncertainties were pretty readily deducible! The key with this tick box is to find out how the technological uncertainties were overcome too. If a company were simply copying someone else or following routine or standard methodology to get to the desired outcome then the project will fall down on the readily deducible test. What we are looking for are projects where companies are having to solve the issues by going outside the norm and the outcome was not predictable.
- So here are just a few questions to ask your clients?
- Grants and R&D tax credits are both ways in which the Government provides valuable financial support and that is why we are adept in identifying both for our clients. We look at the past and the present! However, there has always been this myth that grants and R&D tax relief are mutually exclusive. I would like to put this myth to bed. If a company claims a grant, it can also claim tax relief and even a tax credit. How much it can claim will depend upon whether it is receiving a state aid grant or a non state aid grant. The SME scheme is generous enough to be considered itself State Aid. As a general principle, any company can only claim one piece of state aid per project. Therefor if a company has received a state aid grant for a project it can not claim R&D tax relief under the SME scheme BUT it can default to the large scheme and claim the significantly less generous 30% uplift. So, in summary, if you have received a grant this will not in itself prevent you claiming R&D relief but it may mean that you have to claim under the large scheme. Therefore, don’t just think about R&D tax relief, think about what grants are available. Cash grants are far more generous that the R&D tax relief itself. Also, what we like to do some planning and maximise both. This can be done because most grants tend to be project-specific. This means they are made to support a company’s initiative in a specific, fairly narrowly defined area. While the cost of this project may only be claimed under the Large Company scheme, there is nothing to prevent the costs of any other projects being claimed under the SME scheme.
- So lets move onto the costs. R&D tax credits can only be claimed for revenue expenses; that is, costs incurred in the day to-day running of the business, not for the costs of capital assets such as buildings or equipment that are expected to last for some years. However, such capital expenditure can qualify for capital allowances; this is known as research and development allowance (R&D allowance). In contrast to R&D tax credits, R&D allowances can be claimed by unincorporated businesses. R&D allowances can be claimed for: Buildings used for carrying on R&D activities, but not the value of the land on which the buildings stand Residential accommodation that is part of an R&D building and consists of no more than 25% of the total building, as measured by cost Acquisition of rights in R&D such as patent rights HowarthLynch Equipment to carry out R&D work.ere is another allowances for capital expenditure in the form of RDA’s. This will be covered in the capital allowances webinar which will be presented by Derek Hussey.
- If a company is part of a group, the whole group must satisfy the above tests. Therefore, as part of the due diligence it is important to understand the group structure to ensure that you do not miss any “linked” or “partner” enterprises. Linked enterprise Two companies will be regarded as linked if one can exercise direct, or indirect, control over the affairs of another, or if both companies are under common control (of another person or persons, including companies or individuals). In this case the financial ceiling tests are applied to the aggregates of the figures in its own accounts and those from all other enterprises to which it is linked. Where companies are linked, the tests apply to their total staff and turnover or balance sheets as appropriate. Partner enterprises Companies that are not already linked enterprises are partner enterprises if one of them holds (on its own or in combination with other enterprises with which it is linked) 25% or more of the capital or voting rights in the other. HowarthLynch 51 HL Ops Manual AE Oct 2015 The ceiling tests are applied to figures based on the accounts of the enterprise plus a proportion of the figures from the accounts of any partner enterprise. Example Nosy Ltd has 200 staff and a turnover of £40m in the year ended
- From 1 April 2013 a new standalone credit (RDEC) has been introduced: this will initially sit alongside the existing Large Company R&D Scheme, but RDEC will become compulsory from 1 April 2016 (for year ends after this date) when the existing Large Company Scheme ceases. The RDEC scheme does not alter the way qualifying activity is identified or how qualifying expenditure is calculated. It is only the method of giving the relief that has changed. For profit making companies the credit discharges corporation tax liability that the company would have to pay. Companies with no corporation tax liability will benefit from the RDEC either through a cash payment or a reduction of tax or other duties due. The introduction of RDEC does not affect claims made under the SME scheme. However, SMEs will be able to claim the RDEC in the same circumstances as they can currently claim under the existing large company scheme. As with loss making large companies, SMEs will now be able to claim a payable credit under the RDEC subject to certain restrictions and set offs on such claims. RDEC Rates: RDEC rate from 1st April 2013: 10% RDEC rate from 1st April 2015: 11% In all cases it is more generous than the old Large company R&D scheme. Adoption of RDEC rules is currently optional but will be mandatory on 1st April 2016. We are currently advising early adoption of the RDEC rules due to the fact it is more generous than the old LC scheme.
- These data drops are the communications, normally made across contract lines. To generate these data drops and work out the contents we must first go back to the Organisational Requirements that define the information needed to operate the business. These in turn generate the asset information requirements, defining what we need to know about our physical assets to operate and maintain them. To organise this asset information we model in, in the same definition of the word that we model data, not pretty 3D pictures! The AIR and OIR inform the creation of the Employers Information Requirements which is driven by plain language questions. These can be thought of as like how google has changed. In the past you had to be specific as to what data you looked for, now you can ask a plain language question like, where can I find the nearest bar that sells good gin! All this defines what the contractor needs to create in their project information model which through the data drops are applied back into the asset information model.