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Improving cashflow for the construction sector – R&D tax credits

During the COVID-19 pandemic, the inability to work on site is having a massive cashflow implication for all businesses in the construction sector.

As well as various support packages provided by the Government, either by way of grant, deferment of taxes or bank funding, there are other options that can be considered to increase cash flow. Over a few articles we will look at these options, starting with Research & Development (R&D) tax credits.

If a company undertakes activities where there is an element of trial & error to work out a solution to a problem, carries out improvements to existing techniques or overcomes hurdles in providing a solution to a client, it may well qualify for R&D tax credit relief on those costs.

Many construction companies undertake problem solving activities but don’t believe these costs could qualify for R&D, even projects that are unsuccessful.

Although the construction sector is not one that automatically springs to mind when thinking about R&D, it is a very innovative sector who regularly have to adapt processes on new projects. With strict time limits for making claims, it’s always worth speaking to a member of our EQ Property and Construction specialist team to assess your company’s activities in detail.

Together with our EQ Taxperts, we have helped many clients in the construction sector with successful R&D claims, including a client who supplies products to the construction industry. The company started a new project to develop a product for the construction industry that would reduce labour time and costs on installation whilst reducing health and safety issues. We helped our client make a 2-year claim, resulting in tax savings of £32,248, you can read more about this client case study here.

R&D tax credits can provide a much needed cashflow injection at a time when it is vital. Claims may require only 3 to 5 hours of your time and can be done largely over the phone with the likely result of significant tax refunds.

If you would like to discuss whether your business would qualify for R&D tax credits, please email our EQ Taxperts.

Alternatively, if you have any questions regarding your construction business, please email our EQ Property & Construction team at [email protected] or contact one of our offices.

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