Author Archives: Rebecca Rigg

1. UK Energy Crisis: How businesses can cut the cost of rising energy prices

   05 September 2022 3:01 pm Leave a Comment

   Guest Writers
   Blaine Fitzsimmons
   Commercial Partner

   Sarah Anderson
   Senior Strategic Partnership Manager

    

   5 minute read

    

   The UK energy crisis is putting an unprecedented financial burden on UK businesses, especially those with high energy usage like engineering and manufacturing companies. To help, we’ve put together this guide for businesses on how they can reduce their tax burden through energy tax exemptions.

   Manufacturing companies throughout the UK working with products such as metals, glass, ceramics or precious metals can benefit from energy tax exemptions in relation to these works on both gas and electricity. On top of this, if you manufacture certain products, you can get a large tax exemption on your electricity spend.

   We work with two types of businesses in this scheme, the first being companies who are working, forming, bending, treating, processing or casting metals. The second being businesses who make end products such as batteries, semiconductors, plastics amongst a wide range of end products. Both schemes although different, are made up of a few of the many taxes involved in buying both electricity and gas. Although there are some businesses who are likely to have claimed historically, there will be others out there who believe they won’t qualify or potentially have not reviewed with an energy consultant who specialises in tax emptions.

   These two tax exemptions are, Climate Change Levy (CCL) and Energy Intensive Industries (EII)

   CCL is primarily for companies who fold, form, punch, cast, bend or roll metals, as well as heat treatment and coatings. Alongside this, companies working with glass, refractory products, precious metals or ceramics can also benefit. The scheme allows you to claim back the tax you have paid over the last 4 years and applies a discount moving forward. The exemption is based on the activity, materials worked and plant that you have within the business. The only downside is that the common areas which don’t qualify are milling, turning and any laser/water jet cutting.

   EII is aimed at businesses who manufacture specific products and is qualified by the end product produced. Although some of the products are similar to that of CCL tax exemption, EII includes products such as plastics, batteries, fertilizer, paper, wood, stone and textiles as well as a variety of chemicals and petrochemicals. Based on last years prices, if you qualify for the scheme, you would be looking at approximately a 25% exemption of the total electricity spend within the business.

   In partnership with Scottish Engineering we are hosting a webinar, October 12^th covering qualifying areas, common misconceptions and how the schemes can help cut your energy spend.

   Click here to register.

2. Are you in control of your tax refund?

   01 September 2022 9:21 am Leave a Comment

   What would you say if your accountant or tax adviser suggested they take receipt of your tax refund and then forward it on to you? A very loud ‘No!’ probably! So, why is it acceptable for R&D providers to accept payment of tax credits on behalf of clients?

   We are aware of a concerning practice of repayments from HMRC being directly mandated to the R&D adviser, with the consultant’s fees coming out of the repayment before the balance is passed to the client. You might not be able to rescind such an assignment once it is in place. Some agents will even refuse to revoke the assignment, while others charge a fee for doing so.

   HMRC received over 350 formal complaints, between April 2021 and March 2022, which explicitly referred to assignments, a figure which has been increasing annually. These complaints primarily relate to individuals not understanding that their repayment would be sent to the agent rather than directly to themselves, and where individuals do not recall signing an assignment.

    

   What’s their excuse?

   Why would an R&D provider have their client’s R&D credit paid into their own account, from which they take their fee?

   It could be because a particular company represents a payment risk. In which case, it may be acceptable for the R&D provider to protect their own fees by taking priority over HMRC payments.

   Similarly, there may be additional expenses to be defrayed by the R&D provider, reducing the admin requirement on the client company, and reducing distraction from their core business.

   However, these are unusual circumstances and would represent a last resort for a trusted provider.  R&D tax consultants should be able to provide their services and remain profitable without having to resort to such measures.

   From the client’s perspective, assigning your R&D provider rights over your tax refund creates risks, including:

   • your company losing control of its own tax affairs;
   • having no control over when the payment hits your account;
   • while the R&D consultant withholds payment to meet its own purposes and facilitate its own short term cashflow.

    

   So, what should you do?

   Make sure you know what you’re signing up for.

   When choosing an R&D adviser, companies need to confirm what their standard contract entails – as not all providers employing this tactic communicate this upfront to prospective clients.

   It’s also worth checking the provider’s relationship with HMRC, their role in brokering the relationship between your company and HMRC, and the process for settlement itself.

   Should you decide to work with R&D tax advisers who require assignment of any cash payments you might receive, make sure that:

   • they fully and clearly disclose the terms and conditions for forwarding the balance of cash credits back to your company.
   • They confirm that funds paid by HMRC will be held in a ring-fenced account, and will not touch their own trading accounts – providing you with greater assurance, should your provider experience trading difficulties.

    

   Demand complete transparency from your R&D tax provider.

   ABGI is a consulting business working to accelerate our clients’ innovation activity by supporting the adoption of winning IP strategies, deploying world-class digitalisation solutions for design and manufacturing, as well as identifying and securing appropriate funding throughout the lifecycle of innovation projects.

   Integrity is one of our core company values and means something to us. ABGI’s contracts are designed to be clear and readable, as we want to be up-front about the expectations on both sides.

   We would never take assignment over payments from HMRC, unless agreed in advance, between ourselves and our clients, and confirmed in writing.

   To find out more about how ABGI can help your company release its innovation potential, please contact Sandy Findlay on 07807 739033 or email sandy.findlay@abgi-uk.com

3. Quarterly Review Q3 2022

   30 August 2022 2:53 pm Leave a Comment

4. August Breakfast Briefing – Tendering for work with the public sector

   10 August 2022 2:46 pm Leave a Comment

   Catch up with August’s Breakfast Briefing – Tendering for work with the public sector

   This session was delivered by our Trainee Solicitor, Amie Trainor who was previously in a graduate role with North Ayrshire Council’s Corporate Procurement Unit. As many of our member companies are interested in securing public sector contracts, this session was designed to address some of the additional employment law considerations which may come into play when tendering for work with the public sector.

   This session is particularly useful to SMEs as it provides practical guidance on tender questions relating fair work and also commonly requested employment policies.

    

   For a summary of the points discussed in this session, click the links below for slide decks.

   • Click here to view slide deck

    

   Please look out for details of forthcoming Breakfast Briefings, which take place on the first Wednesday of the month from 08:00-08:30. If you have any questions on this Breakfast Briefing or suggestions for future briefings, then please contact Kevin Duffy in the ScotEng legal team.

   Tel: 0141 221 3181

   Email:  kevinduffy@scottishengineering.org.uk