R&D Tax Relief Scheme And The Hospitality Industry

Scottish Hospitality and R&D 

The Scottish Hospitality industry is huge, from producing product, to presenting, and serving it, millions of pounds of revenue is generated annually. Logically, then, the Scottish Hospitality R&D spend by business is vast, as there are many of you that are creating new menus, new food products and improving processes all the while to better serve your customers. However, the UK hospitality industry only accounts for 1% of all the R&D claims made to HMRC. Scottish businesses only make up for 5% of all UK R&D claims are claimed. 

We would like to help you if you have spent time and resources to innovate products or improve processes in your hospitality business. This may cover:  

  • Cafes & coffee shops 
  • Bakeries 
  • Street food vendors  
  • Distilleries & breweries 
  • Hotels & restaurants 
  • Butcheries and fishmongers using curing or smoking techniques. 
  • And more 

The R&D tax relief scheme 

The Research and Development Tax relief scheme was launched back in 2000 and the scheme is administered by HMRC. The principle is very straightforward and is a win-win scenario for both the economy and the eligible companies. 

If the government can make it easier through tax relief for companies to invest in innovation, then it is more likely that these companies will undertake innovative projects to benefit their business growth and contribute to the UK’s future success and standing. 

No better time to claim 

The good news is that since its launch the benefits of the scheme have increased significantly, so there has never been a better time to claim. 

R&D Tax relief is a potential source of cash flow allowing you to invest more into your business. 

Most companies do not know that what they do may qualify them for R&D tax relief, which can prove to be a valuable source of funding. If you have developed new or improved products or processes, you may be carrying out a qualifying activity. 

What are the benefits? 

R&D Tax Relief applies to both profit-making companies paying Corporation Tax and also loss-making companies who are not, both are able to claim for eligible activities. 

Relief can be received as lowered corporation tax or in some cases as a payable tax credit. The calculations are many and varied so the simplest way to help you understand what you might get in the form of SME tax relief (dependent on several contributing factors of course) is about 25p for ever £1 you have spent on eligible activities. 

Can you claim? 

This is where HMRC’s terminology can create confusion and probably why so many companies failed to recognise that they were eligible for tax relief, even to this day. 

We at HASL love a R&D tax credit claim for the hospitality industry at It’s one of the sectors that affects all areas of this industry, driving t forward in many ways. 

Whether it is a new way of smoking fish, an organic beverage distilling procedure, a new cake recipe, your latest attempt at curing meats, or creating a gluten free sausage, or even a new vegan version of said sausage, there are so many reasons to investigate R&D tax relief for companies in the Hospitality industry.

R&D Scenarios 

Product Development 

A new food or beverage product is one of the most obvious projects in which R&D will be involved.  

Market research is a notable exception to what may qualify as R&D for tax purposes, but many other parts of the new product development process may be qualifying for a R&D tax credit claim.  

These include: 

  • Time spent refining recipe formulation, 
  • Experimentation with equipment, and ingredients 
  • Managing environmental factors such as temperature and humidity, 
  • Development of artisanal processes 
  • The cost of consumables like the ingredients that are tested, heat, water and power, 
  • Applicable staffing costs, including Test Kitchen labour for R&D trials. 

So whatever the original driver of the project is, all the costs associated with the above should be considered for an R&D tax credit claim. 

Process change 

Projects driven by process change may be less obvious candidates for R&D at face value. 

But at a large scale everything must be tested thoroughly.

Think about a fa lot of the recent COVID related process changes, the reason for such a process change will be to make interactions with team members and members of the public safer, resulting in a more efficient way of ordering, delivering and cleaning

One thing big examples of this we have seen at the start of the pandemic was for instance, where distilleries changed their production equipment and bottling facilities to produce hand sanitizer, leading to potentially big benefits for production and innovation with regards to delivering their new product

But before these gains were realised, bespoke calibration of the equipment may need to take place.  

This could have involved, for example, the technical expertise of engineers, consumable costs such as ingredients as they are run through the production line to test for a consistent output. And of course, power and water. 

Not just for the Big Boys 

R&D Tax relief could be claimed for: 

  • Creating a product or a method to make a product. 
  • New Processes 
  • Recipe Development

And it’s not just for the big companies, small Ltd.’s are just as eligible for this.  

Eligibility checklist 

If you can answer ‘Yes’ to most of these questions, then it appears like you could have a successful claim:  

  • Have you developed new tools, products or services using technology? 
  • Have you tried to improve your existing products through technical changes? 
  • Have you had to resolve technical problems with any of your products?
  • Have you found more efficient ways to produce your products?
  • Have you experimented with new equipment or production techniques?
  • did you ever scratch your head, whilst beginning a project, wondering ‘about the best way to do this’?
  • Have any of these efforts failed for technical reasons? 

Good News! Based on your answers you are most likely able to claim R&D Tax Credits.  

Claiming your Tax relief 

The key is to identify as much eligible expenditure as you can; The more you identify, the greater the value of the relief you will receive from HMRC. The ideal partnership to deliver the best results for any client is the combination of firm that who speaks both your language and HMRC’s; that’s where HASL comes in, with over 40 years of Hospitality Operations, System and tax and accounting experience we are the ideal partner to walk you through the assessment, preparation, and submission of your claim on your behalf, ensuring you receive the biggest return with the least possible effort. 

To start the process, simply get in touch with us. 


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