R&D Tax Credits For Hospitality

The hospitality industry has been among the hardest hit by lockdown measures in the UK as a result of the coronavirus pandemic. The ongoing disaster is affecting not only small businesses but also some of the industry’s biggest names, including Weatherspoons, Whitbread, and Gourmet Burger Kitchen, to name a few. The hospitality industry is in desperate need of financial assistance. While the government has launched assistance programmes, they are insufficient for some businesses. Now is the time for hospitality-related businesses to investigate R&D tax breaks and potentially claim thousands of pounds in refunds.

Unfortunately, hospitality and leisure businesses are among those least likely to claim R&D tax credits mostly due to the term Research and Development not seeming to fit their activities. According to HMRC’s Research and Development Tax Credits Report 2020, there were less than 1000 R&D claims from businesses within the ‘Accommodation and Food’ industry sector. This is an incredibly low number for an industry that is by nature innovative in having to attract customers by staying up to speed with industry, venue and people trends.

Please think of activities you have participated in focused around Process Improvements, Innovation and Business Progress as these fit the industry better, don’t think that R&D is just for white coats and engineers. There are a lot of R&D activities that go on behind the scenes in hospitality businesses, yet they are never claimed for. For example, R&D activities in the food and beverage industry may include:

Food & Beverage

• Improving the texture, taste and nutrition of F&B formulations
• Testing sustainable or new ingredients
• Creating new samples within a test kitchen environment
• Micro-Brewery technologies

Packaging

• The creation of new packaging to improve durability and shelf life
• Using environmentally friendly materials in packaging, or alternative materials to improve packing

Processes

• Guest interaction platforms including bespoke or customised apps.
• Introducing new methods that will reduce costs and improve productivity or product/service consistency
• Improvements to equipment and machinery to ensure food and drink is handled safely
• Improvements in fire safety control within venues

Sustainability Efforts

• Innovative approaches to reducing food waste, glass, scrap, contamination and spoilage.
• Efforts to using utilities, water, fuel and energy more efficiently within the introduction and integration of new technologies.
• Testing out new processes to convert waste to energy.

Few industries overlook the potential for claiming research and development (R&D) tax credits as much as restaurants and hospitality. Innovation is taking place every day as companies develop new processes, services and recipes, but many are simply unaware of R&D tax relief or what activities would make them eligible to qualify.

For restaurants, bars and hotels, any investment in delivering better service and advancing understanding of the methods and techniques behind it may be eligible. This can include everything from the creation of gluten-free recipes to the development of new technology to assist hotel guests visiting a new city.

Qualifying expenditure includes the materials or ingredients used, as well as the wages paid to staff involved in R&D efforts, so expert advice on compiling and submitting a claim is essential in this overlooked area.

What are R&D Tax Credits?

R&D tax credits are a government incentive designed to encourage innovation across multiple industries. This is an opportunity for you to reduce your corporation tax bill or receive a refund from HMRC based upon the number of working hours your business dedicates to Research & Development.

Under the scheme, SME’s can claim back up to 33% of the costs associated with R&D. That’s 33p back for every £1 spent on qualifying R&D activities. To get an idea of how much you could be refunded, check out our handy online R&D calculator.

Examples of eligible activities

• Development of vegan and gluten-free alternatives
• Recipe experimentation
• Creation of innovative customer booking apps
• New cooking methods and food prep techniques
• Develop sustainable hotel laundry techniques

At TaxQube we guide you through the process, allowing you to take the lead while we review all your work to be sure that it will pass through HMRC’s vigorous checks. We review your information, can recognise missed opportunities, and even submit the claim on your behalf. Get in touch now by calling 0208 1234 768, or using our contact form, for professional, friendly advice.