There is a growing trend towards looking for health solutions in the life sciences.
This is a hugely important sector that is concerned with supporting life and health in individuals.
Many of the improvements we have made in recent years with the treatment of diseases, illnesses and conditions has come through technological advances.
The list goes on as people think ‘blue sky’ and come up with solutions that we could have imagined ten years ago but didn’t have anywhere near the technical skills or knowledge to put into effect.
Now we have vast computing power, 3D printing and app developers that can deliver something that will help people live their life for longer with better care.
Take remote monitoring, for instance.
The cost saving to the NHS in terms of people monitoring blood pressure from home and this being reported via an app means fewer trips to the hospitals, shorter waiting times, less pressure on the nursing staff and the doctors being freed up for the most acute cases.
This lets the most accurate care be delivered to those who need it most. Others can stay healthy and fit at home, safe in the knowledge that they have access to a doctor when they really need one.
These technologies are being developed globally as the population of the planets grows and ages.
There are signs that people will live to be 150 and over. This means that there will be more time retired than the rest of their life put together.
Those people will probably need greater healthcare for a much longer period of time.
The life sciences industry is working on solutions for all of the major diseases that affect people as they get older, such as –
And many more. The fact is that for whatever currently known illness or condition, there will be some tech work being done by the life sciences industry to lessen the impact or eliminate it altogether.
These solutions often come at a cost. If you take the pharmaceuticals that we use as an example, then there are years of research out into coming up with a new drug.
This can often lead to the project being abandoned because it just doesn’t come up with the solution desired. If the product looks like it will work, then the trail stage is entered.
This means that it has to go through a series of stringent tests to be given a licence to be sold or used in the NHS. This part of the process alone can take several years.
So, all of this costs money – a whole stack of it in some cases. And this needs to come from somewhere.
There are several different options for the life sciences industry when it comes to raising finance. Let’s take a look at the options on the table –
Going to the bank. This was traditionally the route of choice for most businesses.
The bank would listen to your idea, decide whether they thought it was viable and then look at the security they would need to lend you the money.
Most of the time this included personal guarantees or a charge over your home. The business bank manager would need to see your business plan, meet with you and ask a whole load of questions before making any kind of decision.
And that was before the financial crisis of 2008 that really took hold of the market. Lending to business has never been the same since.
The appetite for the banks to lend money was seriously dented. They have never regained that same level of appetite again. If you want the bank to help you start or grow a life sciences business, then be prepared for potential disappointment.
Venture capitalists. Think the BBC TV programme Dragon’s Den and you will have some idea of what this means.
There are people out there that want a share in your business in return for an investment. This might help you to get started or to look at the next phase of your development. These investors might have the contacts to help you develop as well as the cash you need.
The answer here is to find an investor who will support what you do. The risk they take is that they own a chunk of a business that is worth nothing if you end up down the road without a viable solution. So, they drive a pretty hard bargain at times.
Crowdfunding. This is a modern way of getting funding for anything from a product to a movie.
People will look at your proposal and decide if they like what they see. From there they can make a small investment in your life sciences idea and these small investments add up to cover the costs you need to raise. Keeping your investors informed over what is happening in the business is a great way to drive engagement and get the money you require.
There are some weird and wonderful projects that have been funded via this way of raising money.
So, this could be a viable option for the startup that wants access to cash in order to make things happen quickly. Unlike the venture capitalists above, there will be no direct input from your funders, giving you the freedom to operate in your own way.
Asking friends and family. Many a great business has been grown on the back of the faith friends and family have put into a project. If the people closest to you understand what you are doing and believe in it as passionately as you then you can end up with a great source of funding for your life sciences business.
Don’t treat this kind of investment any differently to the other outlined above and below.
Get agreements drawn up, checked out and signed. You don’t want to sour a good personal relationship over a business transaction. If you are bringing your people in as shareholders, then a shareholder agreement id the ideal way to make sure everyone involved is protected.
Going into debt. You may have other assets that you could use to fund a project for your life sciences business or to get a new venture off the ground.
Many people have a significant amount of equity in their home or access to savings or investments. You could use these to raise the cash needed for your business.
There are risks to all of the above ways of raising money. But it wouldn’t be business without some form of risk.
You could get close to a solution to find a competitor has already got there or find that your product isn’t appealing to the mass market for one reason or another.
But there is another way of securing the funds to grow your life sciences business. R&D tax credits are an amazing way to raise the money needed for that next level of expansion. And they are within closer reach than you might think.
The government wants to reward the companies in the UK that take a commercial risk in order to improve what they do. This is broadly known as research and development. This has been in effect for over a decade now, but the importance of R&D has been highlighted by the rise of Brexit with the challenges and opportunities this brings.
So, they have decided to support UK businesses to compete and ensure we remain competitive. This is delivered by the HMRC in the form of R&D tax credits. To qualify, you need to have made some advances in what you do. This is perfect for the life sciences industry as this is the very essence of what this sector does day in, day out. It can come in many forms –
Developing a new life sciences product that helps people with their health and wellness
Improving an existing product or device
Coming up with a piece of tech that helps doctors work more efficiently
Changing the processes or procedures in your business for better results
Investing in and embedding new equipment
In fact, there are a huge number of reasons a life sciences company can make a claim for R&D tax credits. All you need to know is what the system is all about and how you can apply. You are in the right place for both of these. Stick with us for the rest of the article and Lumo will show you what life sciences R&D tax credits could mean to you.
What do I need to know?
The very first thing you need to know is that these R&D tax credits are a government scheme and are available to all eligible businesses. If you have spent money on improving your business over the last few years, then there is a strong chance that you can make an application for R&D tax credits. If you are not sure what all of this is about then drop us a line. We have been helping life sciences businesses for years to make claims to the HMRC. It only takes us round half an hour to get to know your business and advise you of your eligibility for a claim. There is no fee for this meeting and no obligation to use us after.
Making a claim is quite a simple process if you know what the HMRC are looking for. There are a few elements to the definition the tax man uses for research and development. They want to know that your project –
Looked for an advance in science or tech – you should have that covered in your industry
Had uncertainty to overcome – who doesn’t in business?
Worked to overcome this uncertainty – pretty much a given
The solution wasn’t already available or easily worked out – check that box too
If you can say all of these things about a life science R&D project in your business, then you may well have an R&D tax claim on your hands. There area number of rumours out there about R&D tax claims and whether they are worth the effort. Here is our take on that –
People will talk about different aspects of business all the time. Whether you are on the golf course, networking or sat in the pub, people in business like to talk about business. When the topic of R&D tax credits comes up there are generally three responses –
We’ve submitted a claim and it was great for our business!
It’s not worth the time and effort, mate!
What are R&D tax credits?
If you fall into the first category, then that’s fantastic. Share this success with everyone you know in business. The government has funded these credits for the next few years at least so there is every chance your contacts can access this great source of cash.
If you are either of the last two, then you are in the right place to learn more. Here are some of the myths about life sciences R&D tax credits that are put out there –
It isn’t worth the effort. You would be amazed at how many times we hear this. The average size of a claim we make on behalf of our clients is over £35k. Now do you think it might be worth it? Where else can half an hour of your time lead to such a substantial cash injection for your business?
It’s a scam. Yes, we’ve heard this one too! The fact that the scheme is administered by the HMRC on behalf of the government should be all the indication you need that this is a legitimate thing. There is no scam about this. If you want proof, then ask for the details of some of our happy clients. They will let you know the success they have had with R&D tax credits.
It’s only for manufacturers. There is a myth out there that R&D tax credits are only in place for companies that manufacture a new product. If you are making something new, then it follows that you will have likely carried out research and be eligible for this valuable government incentive. But there are other reasons that an R&D tax claim can be submitted, such as improving an existing product or developing software in your life sciences business.
It’s too complicated. Some people see the process of making a claim for R&D tax credits as an intricate thing that requires a lot of time and effort. You are an expert in your own life science business but probably don’t know enough about R&D tax credits to make a claim without doing a lot of investigation. But making a claim can be really easy. All you need to do is call the experts. We take all the strain on your behalf, so you don’t have to.
You can’t get them if you have had grant funding. There are many ways of raising finance for a life sciences business. As they are heavily involved in innovation, there are often opportunities to get finding from different agencies. And many people believe that this stops a company from receiving R&D tax credits. That isn’t always the case. Although there are rules surrounding eligibility, we can help you to work this out. Just drop us a line.
There are all manner of reasons put out there by people who just don’t know enough about what R&D tax credits can do for a life sciences business. If you want to know what it all means, then check out the Lumo website to see how we can help.
Why not? The process is simple, the results are real and the difference it can make to a business is tangible. If you have a potential claim in your business, then our advice is to go for it. You have very little to lose and a lot of money to gain. R&D tax credits have been funded by the UK government for the foreseeable future, so a smart business makes research and development an integral part of their business plan.
You should seriously look at the impact an R&D tax claim can make for your business. There are so many things you can do with a cash injection, such as –
Think about the impact a large cash injection can have on your company. This is the power of an R&D tax claim.
You can go for it on your own. Submitting an R&D tax claim for yourself shouldn’t be a huge hassle. But if you want to maximise a claim and have a hassle-free time then you might want to consider using an R&D expert to handle it on your behalf. Here are some of the reasons why you would choose to do that –
An expert will find every possible piece of expenditure to include. You might be able to piece together a claim, but do you know if you have included everything? If you are making a claim, then you want to cover it all and get as much back as possible.
An R&D specialist will deal with the tax man on your behalf. You cannot underestimate the time and stress dealing with the tax man can cause. A phone call to or from the HMRC can take a sizeable chunk out of your day – and also give you grey hairs! Lumo deal with all of this for you. We start the claim, follow up with any enquiries and chase things if needed. You get the chance to get on with your business.
Your time is precious. There are only so many hours in every day. Think about wat else you could be doing with the time spent learning about R&D tax credits and putting the research together to submit a claim. You could be delighting customers, supporting the team or even getting home when you said you would! That’s the power of giving your claim to an expert.
The language of the HMRC can be difficult. There are two elements to this. Firstly, the tax man talks a different language to the rest of the world. We have been dealing with the HMRC on R&D tax claims for a number of years and know what they are talking about. Secondly, the explanations sent to the HMRC need to be clear and concise. You may know a lot about your business, but the tax man does not. We put the information in a clear and precise manner that ensures a claim is processed quickly and is far less likely to be investigated.
A free assessment. Yes, tat’s right. The start of the process with Lumo is that we offer a free assessment of your eligibility for an R&D tax claim. There is no charge at al. We will come to your place of work, you can come to us or we can meet online. Whichever of these you choose, we will only take around half an hour of your time. In this meeting we will let you know your eligibility for a life sciences R&D tax claim. There is no obligation to work with us from then on, but we are sure you will be so delighted with the knowledge we bring and the service that you will want to work with us.
We keep you informed. The last thing you want is for us to disappear and forget about you. Your dedicated account manager will send you regular updates about what is going on with your R&D tax claim – in plain simple language with no jargon. Want to chat about it? No problem – just pick up the phone.
The Lumo difference is we do this all the time. We have been helping businesses across the United Kingdom to claim their rightful share of the R&D tax windfall for many years now. And we are here to help your life sciences business secure your R&D tax claim. If you haven’t made a claim over the last 2 tax years, then we can look back at those too. So, don’t delay. Get in touch with our team today and find out how all of this can develop for you and your business. Spread the word to your contacts too. Life sciences R&D tax credits are here to stay!
By Lumo Tax