McMullen Facades is a leading specialist facade contractor which has been involved in the construction of many landmark buildings in London and around the world. It has urged the government to honour its pre-election pledges stating support for R&D is vital to the manufacturing industry.
Although the manufacturing industry accounts for the majority of R&D expenditure in the UK (65% or £16.3billion in 2018), this is down from 84% in 1985. Counteracting the effects of this trend has been one of the main focuses of UK industrial policy in recent years. For example, successive governments have supported the development of the Catapult Centre Programme.
Ronnie Mills, managing director of McMullen Facades said: “R&D is at the very heart of our company, we place great value on the benefits of innovation and continually look at areas where we can improve to keep us at the top of our game and remain competitive. We value support for R&D and are pleased to see the government rewarding innovative companies through R&D Tax Credits. But this support must continue, and I urge the Chancellor to enhance the level of R&D Tax Credits in the upcoming budget.”
Tax specialists, The Momentum Group, has also launched a whitepaper to ensure businesses in the manufacturing sector are getting all the support they need.
Managing director, Tom Verner said: “While HMRC statistics show many industries in the UK are waking up to the benefits of R&D Tax Credits, the potential is far greater. In our experience, there are still so many manufacturing businesses that are either not aware of R&D Tax Credits, incorrectly think they do not qualify or feel they lack the necessary experience to submit a claim. In fact, many companies are not claiming their full legitimate entitlement and could be losing out on tens of thousands of pounds.”
Johnathan Dudley, Head of Manufacturing at national audit, tax, risk and advisory firm Crowe wants SME-specific tax reliefs: “To make a success of Brexit, the UK needs to be renowned as a strong export nation and one at the forefront of innovation. In order to encourage capital investment in Industry 4.0 technology and equipment, the Chancellor should consider implementing an enhanced level of capital expenditure relief, at least for SMEs and at a level greater than currently available through Annual Investment Allowance. Likewise, enhanced revenue reliefs for SME export activity should also attract enhanced tax relief. By implementing such initiatives, in a similar method to the tried and tested R&D tax relief, the government could fairly swiftly go some way in securing the UK’s future as a major global player in innovation and international trading. This would be a solution that could be easily legislated to benefit SMEs and would improve both productivity and global competitiveness.”
Andrew England, tax partner at accountancy firm, Menzies LLP, hopes to see increased certainty around the Annual Investment Allowance. “Investment requires confidence, and this can’t happen in a climate of uncertainty. Manufacturers need to know what is happening to the AIA so they can understand the costs of new plant and machinery and invest in their growth plans. The Chancellor could address this by either increasing the allowance or extending the current limit until at least the end of 2022. Alternatively, if a blanket increase in the AIA limit is considered too costly, the Chancellor could select specific areas of capital expenditure, which might qualify for enhanced tax relief (say, of up to 110% of cost) – for example, investments in robotics, AI systems, data integration, 3D printers and other value-driving tech.”
Bob Trunchion, tax partner at MHA MacIntyre Hudson, says it may be time for VAT and other taxes to take a vacation: "The coronavirus threat is worrying enough for the UK economy but an upswing in company insolvencies in its wake would make the situation even worse. Cash flow is the number one cause of business failure and the disruption the viral outbreak may bring could therefore lead to a substantial increase in business failures. The government’s COVID-19 action plan, published yesterday, claims the government will consider whether cash strapped businesses can use its Time to Pay (TPP) scheme, on a case-by-case basis, to make tax payments more manageable. We believe this will be an inadequate measure if the outbreak escalates. TTP works well but the process is bureaucratic and HMRC requires a lot of information before agreeing it can be applied. The business also needs to formulate a repayment plan, which isn’t always possible in the midst of a crisis. In addition, TTP doesn’t cover the major ongoing expense of business rates, only taxes administered by HMRC. A major virus outbreak in the UK, that includes quarantine measures, falling demand for products and services and a lack of staff availability will put companies in a very difficult situation. While sales would fall, costs such as rents, rates, mortgages and payments to suppliers and staff will remain constant.
“A key measure for the Chancellor to consider for the Budget is a ‘tax holiday’ for major business costs like rates, PAYE tax, national insurance contributions and VAT. The holiday could be implemented if the outbreak worsens and the economy suffers. Usually tax holidays or temporary reductions in tax are used to boost growth; but in this case would help prevent company bankruptcies. In addition, HMRC needs to adapt and allow time to pay self-assessment income tax and corporation tax in more flexible ways. The upcoming budget is a key moment for Chancellor Rishi Sunak to reassure the business community. Hopefully he will rise to the challenge.”
Kevin Brundish, CEO and founder of AMTE Power has called for more to be done to boost the UK's electric vehicle market: “February’s new car registration numbers demonstrate consumer confidence in green automotive technology still needs bolstering. The Budget is the Chancellor’s chance to continue supporting the market and show that the country is serious about hitting environmental targets and becoming an attractive place to invest in electric vehicles. Manufacturers need a more central position in the supply chain, and by investing in next-generation battery technology, the transition to electrification can be better supported. A huge influx of new electric car models are hitting the market this year, putting pressure on the government to incentivise consumers and invest in charging point infrastructure in order to accelerate EV demand. Creating a robust UK supply chain for the production of lithium-ion batteries would strengthen the UK’s automotive sectors, making the country an attractive destination for international car-makers. Battery supply for the UK manufacturing industry is already struggling to meet the demand for new vehicles, and in response, the creation of full-cycle battery plants should be prioritised instead of relying on large scale manufacturers abroad. It is costly and increases carbon footprint to have these batteries imported, especially when the UK has the talent and capabilities at home.”
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