Innovation

Independent Accountant’s Report

A grant funding body likes to have some comfort that the grant provided is funding the right expenditure. This often requires further review from an independent accountant. That’s where we can help.

Who does the IAR go to?

As the independent accountant is selected and appointed by the grant recipient, the IAR is issued to the grant recipient, although it is usually recognised that the report will also be seen by the grant funding body.

We have experience in completing grant audits for a number of providers including Innovate UK and Horizon 2020 among others.

When is an IAR due?

This largely depends on the grant funding body and the level of expenditure. However, as a general rule, reports are usually required for the first quarter period for which the grant is claimed, at the end of the grant period and at annual intervals in between if appropriate.

What can I claim on and what proof do I need?

What costs can be claimed?

Most operating expenses can be included in a grant claim, namely:

Internal staffing costs,
External staffing costs such as subcontractors,
Material costs,
Travel expenses,
Depreciation costs associated with project related capital expenditure,
Other costs, such as software, and
An allocation of overheads, usually calculated as 20% of your internal staffing costs.

Depending on the frequency of the audit and the number of transactions involved, we would need to test a sample, or all, of the items included in your grant claim and would perform a three-way match between the costs being claimed, the supporting invoices or payslips and the company’s bank statements.

Independent Accountant’s Reports must be submitted to Innovate UK within 30 days of the end of the relevant audit period, and therefore it is important that you work with an auditor that has the requisite knowledge and capacity to complete the work in a limited timeframe.

Client story: Auger Torque Europe Limited

Background: Established in 1998, Auger Torque Europe Ltd develops and produces hydraulic attachments for the construction and agricultural industry. The continuing demand for transportation and infrastructure is constantly driving product development and service. As a result, the company is continuously expanding its product range.

How we helped: Since 2013 Hazlewoods has worked closely with Auger Torque Europe Limited to understand the composition of the company’s sales and the nature of the patented technology, to assist the company in identifying the relevant income and profits for Patent Box purposes.

Mike Cartwright, Chief Financial Officer at Auger Torque Europe Limited, said “Hazlewoods has been a great support to Auger Torque. They have taken the time to understand our business and the products that we sell and used this knowledge to submit successful R&D and Patent Box tax relief claims to HMRC.”

Client story: Rapid Ramp

Background: With over three decades of industry expertise, Rapid Ramp stand at the forefront as a premier manufacturer, supplier, and installer of modular ramps and steps in the United Kingdom.

How we helped: Mark Pons, MD of Rapid Ramp said, “We have benefited significantly from the Patent Box tax relief scheme. Effectively we now pay 10% Corporation Tax instead of the standard 19% (which has now increased to 25% on our profits attributable to patented products). Jemma collaborated with HMRC to determine the notional royalty that could be appropriately applied with respect to Patent Box. Recently we successfully acquired new business premises, and this achievement was partly facilitated by the tax savings we had accumulated. As a result, our business is now poised for significant growth.

In summary, the Patent Box is a highly valuable tax relief for businesses like ours. I thoroughly recommend Patent Box and the expert advice that Hazlewoods have brought to my business.”

Client story: TBS Engineering

Background: Founded in 1968, TBS Engineering is a world-leader in producing automatic machinery for the lead acid battery industry.

How we helped: When Patent Box was first introduced, Hazlewoods explained the intricacies of the legislation to TBS Engineering and how this
could apply to the company’s assembly line sales. Due to the complexities involved, Hazlewoods arranged a meeting with HM Revenue and Customs at the company’s premises to discuss and agree its conclusions.

Jon Curtis, Group Finance Director of TBS Engineering Limited, said: “Hazlewoods made a complicated claim process relatively straightforward for us. After initial discussions to understand how the patented items incorporated into our products, Hazlewoods liaised directly with HMRC on our behalf to ensure that all relevant income was fully captured. The services provided to us in respect of R&D and Patent Box reliefs has been invaluable.”

Client story: Ubiqutek Limited Trading as Rootwave

Background: Rootwave kills weeds using electricity to give better weed control at a lower cost than chemical herbicides whilst protecting health and helping nature restore its soils, water and biodiversity.

How we helped: After dealing with Hazlewoods in a previous company our services were recommended to Rootwave by the interviewee, this is what she had to say.

How has Hazlewoods helped you and what has this meant for Rootwave?
“We needed a larger accountant with more specialist knowledge, and this is what Hazlewoods excels at. Jimmy has been extremely helpful, with no question left unanswered. Hazlewoods also prepare our R&D claims for our grant funded projects and that process has been seamless too. As we plan to grow over the next few years, having someone onboard with the dedication and skills was paramount. By choosing Hazlewoods with their size and international connections it meant we wouldn’t run the risk of outgrowing our accountants again. It’s the long-term investment and relationship that has benefited us and allowed us to expand.”

How did you find the process, did you clearly understand what was required of you?
“The process has been smooth and exactly what we required. Jimmy was very receptive to meeting as and when it was required, either in person, Microsoft Teams, or a phone call. The templates he provided were great and allowed Jimmy to be clear on what he required from us. It also meant he could provide clarity on the parameters within which he could operate.” Continued onto next page…

Client story: Ubiqutek Limited Trading as Rootwave Continued

Continued…

Any other thoughts you would like to share about your experience with Hazlewoods?
“As grant audits are so important for the release of grant funding, the turn-around we have experienced with Hazlewoods has been great. This is especially important due to the deadlines that are put in place for submitting the applications. They have been reliable with their deadlines across the board in other areas too, which has really helped us. The specialist services that Hazlewoods can offer is unmatched which is reflected in the investment you make for longer term benefit.”

Finally, what does the future hold for Rootwave?
“We are hoping to expand. We are currently carrying out some fund raising with a view to selling some new products next year. As we are a venture capital company, the advice we have received from Hazlewoods has been crucial. As we required more specialist knowledge and advice, Hazlewoods was able to deliver that advice because of the experts they have in their fields. We are glad we have them onboard so we can move with alongside them as we grow.”