Benefiting from 'The Innovation Pound'
Listed inBusiness & Finance
First published in the April 2016 issue of Quarry Management as Remember R&D?
Martin Hook, managing director of Alma CG, explains how mining and quarrying businesses can benefit from ‘The Innovation Pound’ and gain competitive advantage
Research and development (R&D) tax specialists Alma Consulting Group have launched a new awareness campaign to remind the mining and quarrying industry about the significant role innovation has to play in boosting the sector’s economy.
The news follows the recent publication of ‘The Global Competitiveness Index’¹. Whilst Finland emerges as the most innovative country in the world, the UK failed to even make the top 10. Ranking only 12th in the world for innovation, the UK’s disappointing position has been attributed to a range of factors, including availability of scientists and engineers and an under-capacity for innovation. Other factors include the UK’s lack of company spending on R&D, despite existing estimates showing private rates of return for R&D investment of around 30% (Source: BIS/Frontier Economics, 2014).
Martin Hook, managing director of Alma CG, is adamant that R&D spending must remain at the heart of the mining and quarrying sector’s economy. He commented: ‘The R&D tax relief scheme in the UK is actually extremely generous and globally competitive. However, all too often businesses are failing to make the claims that they are entitled to, with many companies not realizing they are eligible.
‘In fact, recent HMRC statistics show that out of the 18,965 R&D claims in 2013–2014, only 0.26% were made from the mining and quarrying industry². Many businesses in this sector may not see the relevance of the scheme to their activities, but with many of the industry’s day-to-day challenges potentially qualifying it is worth investigating.’
To help the mining and quarrying sector benefit more from the ‘innovation pound’, Alma CG has produced a top-five checklist to help businesses tap into their innovation potential and convert it into economic gain.
1. Focus efforts on benefit-led innovation
Companies in the mining and quarrying sector can innovate in many aspects of their work. In fact, many organizations are carrying out work that is considered to be R&D by HMRC when often it is considered day-to-day activity by the organization itself. However, in addition to more obvious new product development work, activity that demonstrates a technological advancement, solves a specific industry problem or is seen as ground-breaking innovation can often reap the most immediate economic rewards.
2. Invest in training and development
The attraction and retention of talent is critical to fostering innovation. However, The Global Competitive Index ranks the UK a disappointing 22nd for availability of scientists and engineers, lagging significantly behind Finland, which is ranked first, with Qatar second and Japan third. In contrast, Finland has 7,482 professionals working in R&D per 1 million of the population, compared with the UK which has just 4,024 (Source: The World Bank). To remain competitive, businesses need employees who are armed with the right skill sets, especially as the mining and quarrying sector becomes more technologically advanced. Science, technology, engineering and mathematics (STEM) skills are absolutely critical to ensure the sector benefits from its investment in innovation.
3. Network with like-minded businesses
The UK’s growing number of innovation hubs provide fantastic networking and mentoring opportunities for like-minded individuals and companies. Often targeted at specific sectors, the hubs are a collaborative hotbed of industry expertise. Not only does this make it easier for businesses to access specialist skills, it also actively encourages the promotion of innovation by the exchanging of ideas and the creation of exciting partnership prospects. For example, in Scotland in 2014, the Construction Scotland Innovation Centre was launched. The Centre provides tailored innovation support to the construction industry across all aspects of innovation, whether it is product, process or business innovation.
4. Do not forget to claim R&D tax relief
Alma CG’s experience shows that there is a gap between how UK businesses view R&D tax relief and the reality. All too often companies are missing out on this valuable opportunity to bolster their financial position. It does not matter if a company has never claimed, has not claimed for a decade, or is already claiming; companies must review what they are entitled to on a regular basis.
5. Take advantage of Europe’s generous innovation funding
The European Commission, through its Horizon H2020 funding programme, has a global budget of nearly €80 billion to support research and innovation projects. One new focus is on pushing new services and products to market, and cash is available to plug the gap from the end-of-development phase to innovation-on-the-market.
As Europe’s largest specialist R&D tax team and with more than 25 years’ experience unlocking government funding opportunities for clients, particularly in relation to R&D tax relief and innovation-related grants, Alma CG work with companies and organizations across the mining and quarrying sector to tailor bespoke consultancy services to suit specific requirements. The company’s key UK achievements include: more than £0.7 billion of eligible R&D tax expenditure identified to date; more than £100 million of R&D tax relief claimed for UK clients to date; 100% of claims accepted by HMRC; more than 98% of submitted claim values accepted; and uplifts of up to 300% on some clients’ previous claims. For more information visit: www.almacg.co.uk.
- The Global Competitiveness Report 2014–2015 (The World Economic Forum)
- HMRC (September 2015). A total of 50 claims were made in 2013/2014 from the following classified industry sectors: Mining and quarrying (50 claims/0.26%)