How R&D tax credits can incentivise the technology sector to get creative and experiment.
A recent report commissioned by innovation foundation Nesta by Immerse UK on immersive technology revealed that the sector is looking to make £1bn in the UK, by the end of 2018.
The UK is currently home to over 1,000 specialist companies, and it is evidently an exciting time for businesses in this area, with an increasing number of opportunities opening on the front of funding.
Immersive technology can transform consumer entertainment experiences, but also provide many industrial applications, where visualisation is a key element of the design or sale process. However, no matter how good a product is, businesses need the right structure in place to effectively bring in customers.
The UK is host to a number of exciting start-ups in this area, such as Zappar and Dream Reality Experience. But businesses must remember that a product needs to offer a solution, and fit for a specific reason. It is important that growing companies focus on answering a particular need, rather than simply developing tech for tech’s sake.
For example, companies like Musion have made great progress in developing technology to allow 3D holographics to be integrated with performances on stage. Unfortunately, many of the UK SME immersive technology developers have yet to spark the imagination of creatives to enable the business to expand out of a niche production area and become a major player in the entertainment world. What this challenge lacks is a parallel stream for potential users to obtain support to develop proof of concept systems rather than restricting funding to the IP holders. It is companies such as ATG or Pinewood that would unlock the real potential of this technology.
In order for the UK to succeed in this space, it would be better for the government to incentivise existing companies to experiment with the technology and its applications. At the moment, grant funding is restricted to the IP holder rather than the experimenter looking to apply the technology. However, R&D Tax Credits could be an important tool for this. Claimants do not necessarily need to retain the IP for the technologies they work on, meaning that R&D Tax Credits can support collaborations between existing creative firms (for example) and the tech start-ups with the technology. But many companies are missing out on innovation credits as they do not believe they apply to creative businesses. Only through collaborations, will it be possible for growing Virtual Reality and Augmented Reality companies to ensure that they not only develop great technology, but bring it to market in a valuable application.
My advice would be to invest time in building a strong R&D tax credits claim, which will require an eye for detail and a deep understanding of the regulations. Many business owners are often unaware that the work they’re doing could qualify. This is a real shame, as R&D Tax Credits are a great way of getting tax relief on money spent creating or modifying products, processes or services.
Putting together an eye-catching creative claim will give businesses a higher chance of securing R&D credits. Businesses smart enough to pour time into this area of funding and allow the experimenter to have decision power will put themselves on track to excel.
Submitting an R&D tax credit claim could be the first big interaction many new companies will have with HMRC… Read more What financial matters do you need to consider when setting up a new business?