Why is Research and Development (“R&D”) Important for those in the Food Industry?

R&D normally delivers a cash flow benefit to those innovating in the Food Industry.

The UK tax system provides companies with enhanced tax relief for expenditure on qualifying R&D activities. This relief can:

• Reduce existing tax liabilities
• Result in a cash payment to the company
• Reduce future tax liabilities

Food Industry operators normally incur expenditure that will justify a significant claim for tax relief.
R&D normally delivers a cash flow benefit to those innovating in the Food Industry.

Typical areas of R&D for those in the Food Industry

Where companies operating in the food industry innovate to develop and enhance their products, uncertainties normally must be overcome. These innovative projects normally always involve R&D allowing a claim for enhanced tax relief to be possible.
Summarised below are examples of areas where qualifying R&D activities have been identified in projects.

Ingredients

Utilisation of less salt/sugar in processes
Utilisation of additional fresh ingredients to enhance healthiness of product
Amendment of recipes to remove/reduce harmful fats
Gluten free/dairy free alternatives
Development / enhancement of meat replacement products

Processes

Digitising existing processes to reduce manufacturing time and wastage
Improvement in processes to speed manufacture and delivery processes
Amendment of chemical processes involved to deliver healthier products
Amendment of processes to allow delivery of products in a fresher manner

Packaging

Replacement of plastic packaging
Development of packaging that can be resealed
Production of products delivered to consumers in manners easier to consume on the go
Development of delivery system that keeps product fresher for longer

Environmental issues around production, storage and delivery including:

Developing/testing replacement ingredients with enhanced green credentials
Considerations of manufacturing process/power changes to reduce carbon footprint
Replacement of fuel used for manufacturing or delivery activities
Construction of specialist manufacturing sites that meet Net Zero targets

This information is published without the responsibility on our part for loss occasioned to any person acting or refraining from action as a result of any information published herein.

The Claims Process for R&D

1. With AAB’s Specialist R&D Engineers, the qualifying R&D projects that required uncertainties to be overcome are identified
2. With AAB’s Specialist R&D Engineers, qualifying expenditure on R&D projects are
   identified
3. AAB’s Specialist R&D Engineer makes R&D claim with supporting report
4. Cash Flow Benefit delivered
5. Repeat process in next year

To find out more about the importance of R&D in the Food industry, please contact Derek Gemmell, Andrew Blair or your usual AAB contact.