Operators not reaping the creative benefits from tax relief

30 June 2017 by
Operators not reaping the creative benefits from tax relief

Operators experimenting with new recipes and techniques could gain the competitive edge by taking advantage of Research and Development (R&D) tax relief, according to research by Catax.

Over 50% of respondents said they have spent time and money "developing a new product over the past two years" whether it be creating new recipes or food preparation processes.

However the survey of 500 bosses found that three in five (60%) restaurant owners and managers in the UK have never heard of R&D tax relief.

Nearly half (46%) of restaurant owners and managers that had heard of it thought it was restricted to specialist tech, drug and science companies and not available to hospitality businesses.

R&D tax credits are government tax relief rewards for companies investing in innovation. Therefore, hospitality operators that spend time and money developing new products, processes or services or improving existing ones may be eligible for a tax reduction or cash reimbursement.

Almost half of UK restaurant owners also said they thought any eligible R&D activity must be successful and end up on the menu for a claim to be made. This is not true - the outcome of the R&D is irrelevant.

Mark Tighe, chief executive of Catax, said: "Not enough restaurant and gastro pub owners are aware that a big part of what they do, experimenting with new recipes and food preparation techniques to differentiate themselves, will often be eligible for R&D tax relief. What's more, they don't even need to actually sell the recipes they are experimenting with or use the cooking or preparation methods they trial: what matters is the time and money spent trying to do something new and innovate. Importantly, cash can also be realised in as little as eight weeks for reinvestment in future food experimentation."

One restaurant client of Catax received R&D tax relief against the cost of developing a new process for removing fish skin on wild sea trout, without damaging the flesh.

Another client received tax relief against the time and money spent testing the ageing process of beef, and density of the marinade required to affect the flavour.

R&D tax credits can help to reduce a limited company's corporation tax bill or be claimed as a cash sum as a reimbursement from the HMRC. R&D tax relief only applies to those businesses that are liable for corporation tax.

BHA calls Sadiq Khan's proposal for London bed tax an 'absolute folly' >>

Tax fraud charges against London O2 restaurateur thrown out of court >>

Changes to tax rules for gaming machines could cost industry £85m >>

Videos from The Caterer archives

Are you looking for a new role? See all the current hospitality vacancies available with The Caterer Jobs

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking