Tech SMEs can have a significant impact on economic growth, employment and investment opportunities on both a local and national level. Many will be familiar with Research and Development (R&D) tax relief, which allows them to get back up to 33% of the amount they’ve spent on qualifying R&D. However, fewer will have embraced the intricacies surrounding the intellectual property (IP) they’ve created as a result of this R&D, and how they can both protect against its theft as well as claim further tax relief through an IP strategy.
Hiscox UK has teamed up with R&D and IP specialist GovGrant (external link)to help customers maximise financial support from the government and better protect their IP in order to future proof their business. With R&D tax relief in the technology sector well marketed, technology businesses can end up using inexperienced tax-relief businesses. So aligning these businesses with reputable experts such as GovGrant is critical – especially in the pandemic economy.
“Technology companies by their very nature have to undertake a lot of R&D. This R&D, though beneficial in keeping the company ahead of the competition, has a cost attached to it. In times when cashflow is critical to the survival of any business, being able to reclaim the cost of the R&D through tax credits is a valuable lifeline that rewards innovation,” explains Tom Dixon, Head of Technology at Hiscox UK.
GovGrant has already delivered over £200 million worth of claim benefits and Hiscox customers will receive a free initial assessment, free filing for the initial term and reduced fee structures for R&D claims. By connecting Hiscox customers with GovGrant’s R&D experts, businesses will also identify what GovGrant CEO Luke Hamm calls “the gems”: the ideas and innovations that can be picked out as IP for wider commercial value.
Many companies don’t understand what qualifies a product or idea as IP – or how to protect a product or idea through a patent. They therefore risk losing out on the financial benefits of IP. “We’ll ask what IP has been created out of their R&D, and this is where we tend to see blank faces,” says Hamm. Early stage education around IP is critical for businesses, he explains, as they tend to get put off by legal and academic jargon.
While many technology businesses think IP doesn’t apply to them, Hamm explains that it isn’t just about “the moon shots, the lightbulb moments or the next iPad”. Rather, R&D and the resulting IP tends to be about small, incremental improvements and making a product or idea better than it was the day before. And it can apply to almost anyone and anything. “We’ve got businesses ranging from fintech platforms to those offering baby teethers, and everything in between,” says Hamm.
The partnership allows Hiscox customers to access GovGrant’s range of IP services at lowered rates, including IP Harvest – a service that identifies whether a business has something worth patenting. If the answer is ‘yes’, the service offers support with making Patent Box claims: a government initiative that incentivises companies to keep their IP within the UK and rewards them by reducing the corporation tax on profits from qualifying IP income to 10%.
Applying for Patent Box claims isn’t a competitive process – businesses will receive claims if they fit the criteria, which means it’s not surrounded by the time-consuming bureaucratic red tape that some businesses fear.
Businesses build back
As the UK Government encourages everyone to build back in the pandemic economy, helping businesses identify their IP is crucial. “Having these early support mechanisms in place allow people to become early adopters of high-tech solutions, and these are the sort of things that will help us turbo charge the UK’s adoption of technology and become a world leader in it,” says Hamm.
In recognising the risks surrounding R&D and IP, the Hiscox and GovGrant partnership wants to help businesses seize opportunities. “Helping the insured reclaim valuable tax credits and truly understand the IP landscape adds significant value to customers’ bottom line, as well as their business,” explains Dixon. “When it comes to IP there’s a lot of mystique, and this partnership is about bringing it to life and making it simple. We’re taking that relationship between the insured and insurer, and the management of risk and opportunity, to the next level.”