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WHAT HAPPENS IF A COMPANY DOESN’T HAVE ANY RECORDS OF ITS R&D ACTIVITIES?

By Cale Bannister at Myriad Associates­­­­

 

Launched in the year 2000, R&D (Research and Development) Tax Credits essentially offer a tax break for businesses engaged in innovation and was set up by the UK Government. A lifeline for businesses both big and small, they allow a limited company to claim back up to 33% of its expenditure in research and development, regardless of whether the project was a success or not.

For SMEs, it doesn’t matter which sector or industry your company is in, or even if it makes a profit or a loss – it can still claw back up to 33% of the amount it has spent. With larger companies, a maximum of 10% of R&D expenditure can be claimed back, which can add up to some serious numbers.

The way it works is that the amount is paid either as a refund on a company’s Corporation Tax, or in the case of loss-making businesses, as a lump sum credit. The money can then be used for anything, from taking on new staff, settling bills for contractors or even paying salaries. In this article Myriad Associates explain the ins and outs of record-keeping, shining some light on the subject for those who may be a bit confused about it.

 

So why does good record keeping matter?

The key to a successful R&D Tax Credit claim is not simply in telling HMRC that your R&D project took place, but in proving it. The onus is on your company to persuade the tax authority that your R&D activities set out to solve a specific scientific or technical problem (whether it actually succeeded in solving it or not is actually irrelevant) – and the only way to do this is through data and records.

Record-keeping is a vital part of the R&D Tax Credit application process, and HMRC expects to see hard evidence in the form of high quality record-keeping. Accurate, detailed records will not only speed up the process of claiming but can even help to maximise the overall value awarded. However, if you’re finding it difficult to lay your hands on the appropriate records, or you’re worried about some being mislaid, Myriad Associates can still work with you to understand the R&D activities your company has engaged in and help you create your application accordingly.

 

No relevant records at all of your R&D activities? You’re not alone

And most importantly, all is not lost! The first thing to do is not panic; there’s still a good chance you can complete an R&D Tax Credits claim. It’s often the case that companies don’t realise at the time that R&D activities are happening that they are eligible for a tax reduction. Only after the work is complete do they hear about R&D Tax Credits and then end up kicking themselves! Don’t worry – we’ve seen it before. The good news is that innovative projects tend to leave their mark on your business in one way or another, for example in planning applications, media releases or new buildings being erected. So even without any formal records, in many cases developments can still be pieced together to create the basis of a company’s R&D Tax Credit claim accurately enough.

 

What R&D projects are you looking to capture?

To make an application for R&D Tax Credits, you must expressly outline exactly what R&D activities took place and what you believe your qualifying costs to be, as defined by the Department for Business, Energy and Industrial Strategy. The main cost categories are company employees, subcontracted R&D, consumables and external workers such as agency temps.

It is a legal requirement that you attribute these costs to your eligible R&D. When you read through the guidelines you’ll see phrases like ‘just and reasonable apportionment’ and ‘appropriate proportion’ which simply mean you need to work out the attributable time and expenses that were solely committed to R&D activities. If you’re still unclear, we’ll be happy to help you with this.

 

What level and type of R&D record-keeping does HMRC expect?

The government’s Corporate Intangibles Research and Development (CIRD) manual produced by HMRC offers full guidance on how claims for R&D Tax Credits are reviewed. It’s worth nothing here that actually no specific requirements to keep records for R&D purposes have been included. Having said this, over recent years there has been an apparent shift in HMRC’s stance regarding more formal record-keeping expectations, and it’s within its rights of course to update its requirements at any time. Increasingly, HMRC is expecting to see up-to-date, relevant documentary evidence which can be submitted to support an R&D Tax Credit claim. Indeed, as such tax reliefs are courtesy of the public purse (and as we all know, public money is not exactly free-flowing these days), it’s not exactly unreasonable for HMRC to require good quality record-keeping. However, in practice there is a little flexibility with regard to companies that are submitting a claim for the very first time.

 

So what’s the tricky bit?

The main thing to watch out for when preparing a claim is with regard to the time that has passed since the R&D activity took place. As companies are allowed to claim for the two preceding accounting periods, they may inadvertently be looking at projects that occurred before this time (after all, the years go by so fast!). Be careful, as it’s easy to miss the deadline for a claim and therefore not be able to fully maximise its value.

 

How up-to-date do company records need to be?

When it comes to capturing R&D projects, nothing really beats record-keeping in real-time. From HMRC’s perspective it puts your company in a better light as it appears to be a more diligent way of working with less room for errors. This again can often increase the value of a company’s claim compared to claims that rely on estimates.

How records are put together largely depends on the company and its needs. A timesheet system seems to currently be HMRC’s preferred method however this may not always be possible. An alternative way would be to submit a quarterly review of R&D activities undertaken, complete with additional explanation regarding the nature of the work.

 

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Business

HOW TO FIX A PROBLEM LIKE WIRECARD IN 60 HOURS

By Shachar Bialick, Founder and CEO Curve

 

On Friday 26 June, the Financial Conduct Authority suspended its permission for Wirecard Card Solutions Limited (the company which issued the Curve Cards and processed transactions for us) to operate, without prior notice or warning. Unfortunately, as I’m sure you’ve now seen, this didn’t just affect Curve, but many other companies relying on Wirecard in the financial sector.

So, that Friday, with just two hours notice, we were forced to temporarily suspend all Curve transactions and money transfer services, which meant that no one was able to use their Curve card from Friday at 12:30pm GMT

Thankfully, as part of our planned growth strategy, we had already started our transition away from Wirecard a few months back by becoming a principal member of Mastercard. This means that we were able to bring more of our core processes in house, as we continue our mission to simplify and unify the world of money for people across the globe.

Over that weekend, and thanks to a herculean effort from the entire team at Curve, along with our partners at Mastercard, and we’ve successfully completed our migration away from Wirecard, bringing our Card and E-money issuing in-house. This process was brought forward to minimise disruption and restore the service for our customers at the earliest possible opportunity and is a truly remarkable feat, completing a process that would ordinarily take months in just a few hours.

 

But that’s only one half of the story.

In addition to issuing, Wirecard were also our acquiring partner, responsible for processing Curve card payments. And so, whilst plans for finding a new global acquiring partner were already well underway as part of our U.S expansion, no partner had been picked and no deal had been signed.

 

So how to solve a problem like acquiring at a moment’s notice?

Enter: Checkout.com – one of Europe’s finest fintechs and, as luck would have it, the agile, flexible, hard-working heroes we needed to get us back up and running at the earliest possible opportunity.

And so, by 9:30pm on Sunday, fewer than 60 hours after we were first told Curve Cards would be suspended, we had:

  • Brought our card issuing in-house (Thanks Mastercard and GPS)
  • Sourced, signed, and integrated a brand new acquiring partner (Cheers Checkout.com)
  • Onboarded and set up Settlement and Safeguarding accounts (Merci Investec)
  • Tokenised and started testing cards (Thank you engineers)
  • Got Curve back up and running with better partners, better technology, and better unit-economics (awesome work everyone)

 

When the going gets tough….

We are so proud of our team here at Curve, and our customers should be too. This weekend shows us that we are a very unique and resilient company. Our team has achieved what many have believed would be impossible in the last two days. We are strong, we are united, we are agile, and we are… exhausted, but forward we go. We hope that we’ve proven to all, including our beloved customers the true value of being an Over-The-Top Banking Platform.

And whilst we are on the subject of our customers… Wow. The support from them has been truly overwhelming. We’ve had messages, tweets, DMs and a wave of public support like no other in our history – fuelling the team and keeping us going as we continued furiously down the path to get Curve back online.

The best companies often grow out of the toughest situations and although this has been one of the most testing times in our history, we have grown a hell of a lot in just a few days. Curve is stronger, confident, more cost-efficient and in a better position to build, innovate and scale for the future.

To paraphrase a famous bank, we are not just a fintech, we are part of something much, much bigger.

 

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Business

A CATALYST FOR CUSTOMER SATISFACTION AND GROWTH IN THE FINANCIAL SERVICES SECTOR

Peter Walker, EMEA CTO, Blue Prism

 

The financial services sector has undergone a period of rapid innovation over the past decade, with the rise of fintechs and digital banking solutions, which are much more agile than traditional banking options. On top of this, the sector is now also experiencing unprecedented effects due to the Covid-19 pandemic. Institutions must transform their core operations to address these industry disruptions, not only to meet the needs of today’s increasingly interconnected society, but also to help weather the impact of the virus.

In order to maintain a competitive advantage within the industry, satisfy the changing demands of their customers and meet intensifying regulations, Robotic Process Automation (RPA) technology can offer a way forward by providing a platform that runs Digital Workers – intelligent software robots that complete activities in the same way as humans, by mimicking and learning business processes like people do.

With the unprecedented surge in demand of business operations, work isn’t being delivered at its full potential, and at the pace required. People are increasingly unable to support businesses’ needs of extracting and formatting data into a number of different systems, as well as performing a number of tasks which are better suited to technology. This work can lead to stressful environments and errors in a highly regulated process.

 

Addressing the changes in the financial services landscape

Digital banking apps like Monzo and Starling have in the past few years transformed the way people handle their personal finances, and the banking solutions now available to customers means that they have become accustomed to seamless service.

Speed is everything in financial services, and against a backdrop of economic and political uncertainty, traditional banking institutions need to consider changing the way they operate. They must heed the example of digital natives and become more agile, so that they can quickly adapt to unforeseen circumstances in the market.

As the demand for the sector’s services increases in response to the government’s mandated initiatives, such as the Coronavirus Business Interruption Loan Scheme (CIBLS), companies will have to pivot their operations to keep pace with the changing landscape. We always hear about how sectors can digitally transform, and RPA-based Digital Workers can help companies to begin their digital transformation journey and accelerate that innovation.

Implementing Digital Workers

In this challenging climate, where traditional business models have changed overnight, organisations need to fulfil the demands of enterprise operations at the pace required to remain competitive. Increasingly, people won’t be able to support this demand on their own, and technology will plug the gap that humans cannot fill.

A lot of customer-facing activity in financial services is process-heavy by nature. It involves dealing with large amounts of sensitive information and adhering to strict processes, which creates a lot of admin. Strategically deploying Digital Workers and intelligent automation can help businesses to streamline a number of these admin tasks, such as processing loans and mortgage repayments. Automating this process frees up employees’ time so they can improve other areas of the business that automation alone can’t deal with.

Covid-19 has renewed the pressure on financial services organisations – not just simply by increasing the sheer volume of customer service calls, but also by introducing new operational stresses through remote working. Implementing automation technologies in a strategic way can help financial institutions get in better shape to cope, not just during this time of uncertainty, but in the long run. In a recent survey looking at how organisations around the globe are using Digital Workers to stay resilient, positive and competitive in this new economic reality, 95% of business decision makers in financial services revealed that they already have plans in place to extend their use of automation across their business.

 

Support during Covid-19

In response to the pandemic, Blue Prism has set up the Covid-19 Response Programme, donating Digital Workers and services to assist across a number of sectors, including on the front lines of the health emergency, transportation and financial services. These deployments illustrate how RPA can help – as by using Digital Workers, business will be able to maintain business continuity and provide the necessary services to citizens during this difficult time.

During the Covid-19 pandemic, Leeds Building Society has turned to Blue Prism’s RPA technology to rapidly increase its deployment of Digital Workers, helping it to cope with the high demand for mortgage holidays. Mortgage payment holiday requests now exceed 2,000 a day and this is all now being handled by the RPA solution, reducing calls to the contact centre by 75% and providing answers to most of these requests within 21 seconds. This allows front-line colleagues to focus on delivering better customer experiences, and back-office processing teams to work on other priorities for the business. Most importantly, at a time of profound uncertainty when many people are under financial pressure, it helps to quickly resolve their issues.

For a long time, the financial services sector has been slow to adopt new technologies which could speed up internal processes, primarily due to the need to comply with regulatory requirements. Yet automation can help these organisations to adjust to rapid regulatory changes. For example, by helping them to audit their data and processes. Without automation technology, businesses might have to recruit and train temporary staff or hire support from a business process outsourcing provider, which could come at a significant cost.

 

The future of automation in the sector

Financial services perform a vital role in our economy. But the pandemic also provides an impetus for organisations in the sector to transform their operations, and automation has huge potential when it comes to this transformation. By 2024, Gartner predicts that automation technologies will replace almost 69% of the managers’ workloads. The Covid-19 crisis could be a catalyst to hasten the migration of routine and rote business processes and help the sector to keep pace with the changing economic environment, as well as rising consumer demands.

 

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