Imagine what you could do with £68,182 investment in your business. That’s the average R&D Tax Credit claim received by SMEs in the Arts, Entertainment and Recreation sector. We will help you figure out how your innovative work is eligible for this valuable tax relief.
HMRC’s report Research and Development Tax Credits Statistics September 2017 reveals that your sector made successful claims to the value of £15m in just one year. This is a large sum, but it’s only 1.21% of the overall Tax Credit total. Individual claims in the Arts, Entertainment and Recreation sector are actually 10% higher than SMEs in other sectors. If 220 businesses can benefit from this great tax relief, why can’t you?
What could I claim for?
We know what you’re thinking, it’s just for businesses in the scientific and technology fields. But we can help you identify what you do that is considered R&D and ensure that you claim every Tax Credit you are entitled to.
It would seem that the actual R&D Tax Credit rules totally contradict your eligibility for any R&D Tax Credits, with “The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It can’t be an advance within a social science like economics or a theoretical field like pure maths.”
This would seem to exclude any artistic or creative pursuits outright. That’s why so many companies in your sector are missing out, they discount it as a possibility from the off. But it’s all about looking at what you do from a slightly different angle. This is where our outsider’s eye is exactly what you need. Our R&D lenses are perfectly polished and can zoom in on which of your projects are eligible for R&D Tax Credits.
There are four basic criteria which determine your project as eligible for R&D Tax Credits:
- Investigate an advance in your field
This discounts using something that already exists, even if you are applying it to your sector for the first time. It means that you have created a service, product or process that is considered innovative within your sector.
- Demonstrate uncertainty at the start of your innovation
This means that the answer is not already out there with other experts in your field. Whatever you are working on is not already a known technological or scientific thing. You do not know what the outcome may be.
- Explain your working out
You need a record of your innovative project from beginning to end, including explanation of how you tried to overcome the previously identified uncertainty. You will need all the research, analysis and testing as evidence. The wonderful thing about this tax relief is that it is not dependent on the success of your project. You are applying for tax relief for the attempt to resolve an uncertainty. Your project’s success or failure has no bearing on your eligibility.
- Show that another professional couldn’t have come to the same conclusion
You need to be able to show that other professionals couldn’t easily figure out the same advance in your field. This can be done by confirming the expertise of the people working on your project and getting them to explain.
Examples of R&D Tax Credit projects in Arts, Entertainment and Recreation
HMRC don’t include any examples for your sector in their literature, we assume because it is one of the smaller sectors. We give each of our clients a bespoke service that really examines the innovative work you are doing to find eligible activities. Just because you are a smaller company that doesn’t have an R&D department doesn’t mean that you aren’t doing R&D projects.
Anything that has a technological or scientific element counts. Such as:
- Making an administrative process more efficient (IT)
- Engineering bespoke staging or sets
- Using new technology, like GPS or AI, to improve user experience (online, or in the real world)
- App development
This is by no means an exhaustive list and other elements can be taken into consideration. For example, many businesses in your sector make connections within the Education sector, perhaps your R&D lies here.
Why a focus on Arts, Entertainment and Recreation now?
The Arts Council has just published its report on how much this sector contributes to the UK economy. They commissioned the Centre for Economics and Business Research (Cebr) to research how the arts and culture industry impacts on the UK’s national and regional economies.
As you can imagine, there are many statistics and it is not an overly exciting read. But what caught our eye is that growth in this sector is up by 10% in one year and the overall contribution to the UK economy is £8.5bn. This equates to £2.6bn in taxes. So, for every £1 of public funding in the Arts and Culture industry, it brings in £5. Such healthy growth always involves creative innovation of some sort and it is clear that most businesses in this field are missing out on the R&D Tax Credits they could be reinvesting in future developments.
Another interesting point to note here is that the definition of the jobs in this report are confined to; Arts and culture industry, Book publishing, Sound recording and music publishing activities, Performing arts, Support activities to performing arts and Artistic creation. HMRC’s definition of Arts, Entertainment and Recreation encompasses an even broader range.
Making an Arts, Entertainment and Recreation Sector R&D Tax Credit claim
We’re not going to lie, it’s a complex, detail-oriented process that even accountants aren’t always keen to tackle. Once your eligible activities are identified, we then need to decide which R&D scheme is appropriate for the size of your business, find all the costs that can be included in your claim and ensure that all the supporting evidence is properly collated. You can read more details about each of these phases here in our free R&D Tax Credit Guides.
It’s easy to make mistakes that mean that you miss out on important elements of your claim. We do all the complicated analysis and paperwork for you. You just need to provide the relevant information and decide how you’re going to invest your R&D Tax Credit cheque. You’ve nothing to lose by making an enquiry on 0330 0539 112, or email us at firstname.lastname@example.org.