As detailed in the latest announcements by Boris Johnson, the construction sector has been given the all-clear to continue working through the recent Covid-19 restrictions. Whilst this shows some optimism in the industry, there is still some concern within the sector.
Many projects and workers can continue as normal, albeit with some restrictions, and the squeeze on project deadlines has been eased once again. However, the future for upcoming projects has left many firms out in the cold.
The global pandemic has brought around an expected strain on the industry, like many others, and as a result, has shifted an even greater urgency on firms to explore other finance opportunities.
Even the Top 100 main contractors in the country have suffered a 30% fall in contract value, with big names such as Balfour Beatty falling from 1st place last year (£2.08 billion) to 10th place this year (£643m), and Multiplex group posting a revenue reduction between £130 – £170m, around a 10% drop in annual revenue.
The R&D tax credits scheme is a great example of these potential funding options yet, according to government figures, it has been heavily underutilised within the sector since its inception in 2000.
According to government data R&D spending across the UK is set to be at £18 billion by 2024/2025. The construction sector accounts for 12-13% of all UK companies, yet only claims around £420 million per year through the initiative. This highlights the stark difference between both the potential of the scheme within the industry and allocated funds that are being claimed currently.
So; why is the industry so heavily underclaiming? And how do companies access the funding they’re eligible for?
The biggest misconception is that construction companies don’t feel they undertake ‘R&D activities’ and that the technical challenges they encounter on a day to day basis are simply ‘part of the job’.
In the construction industry, the general activity of most will not be driven by technological advancements instead, they are generally driven by a client-led goal e.g. renovating a listed building. The way the construction industry advances, especially within the SME market, is through the challenges it faces.
This means we have to look at it slightly differently; it is the challenges and uncertainties faced which create the opportunity for the company to develop new processes or methodologies, or improve on existing ones (technological advancements), to address these challenges with a systematic approach.
We were founded on the premise that the Construction industry wasn’t utilising the scheme as they should and, despite our growth, Bonham & Brook remains to be an R&D tax specialist who works largely within the construction sector. We have helped companies in this space access over £11 million in R&D credits in 2020 and we look to help many, many more with their businesses growth.