In the final article of Legal Insight, PM+M partner, Helen Clayton, discusses the continued growth of research and development in the legal sector, and how taking advantage of these opportunities can benefit your firm.
In PM+M’s February 2021 newsletter, I interviewed Alex Hutchinson of the Chatham group, read more here, where technology was a major theme of discussions, likewise, in my discussions with Sara Hutton in the latest edition of Legal Insight.
Technology is already critical to the effective running of a law firm and its resilience and capabilities have been tested recently through remote working and remote meetings. However, many firms have still struggled with not being paperless and the logistical issues this has created, not to mention the safe storage of client papers, whether hard copy or electronic. GDPR and cyber security have reared their heads in countless discussions.
Identifying and implementing the appropriate technology, the most appropriate for your firm and goals, is only part of the solution. Engaging everyone in the why and how of utilising it to its best abilities is critical in enabling the best outcomes – for managing and leading the business and driving up profitability, for the employees and for clients.
Obviously, technology extends far beyond just being paperless.
Successful and forward-thinking law firms are embracing technology, investing for the future and the more entrepreneurial are considering how future technology can set them apart, gain market share, cope with changing financial and operational pressures, reduce costs and improve profitability and cash flow.
We are seeing an increasing number of opportunities within the professions to take advantage of the generous tax reliefs available for firms that are embarking on eligible projects. If you’re unsure, it is always worth a brief discussion as any tax relief is worth taking advantage of, if you are eligible to do so. Additonally, claims can also be made retrospectively, so don’t worry if you think you may have ‘missed out’.
Research and development applies to such a broad range of opportunities – it is not just people in white coats in sterilised laboratories. It is a corporation tax relief and therefore needs to be within a company; hence, advance thought to how and where this work is done is advantageous. Depending on the size of the company, there are different levels of relief.
As an example, SME R&D tax relief is available if you’re a SME with less than 500 staff and a turnover of under 100 million Euros or a balance sheet total under 86 million Euros. You may need to include linked companies and partner enterprises when you work out if you’re a SME.
This SME R&D relief allows companies to:
- deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction;
- claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss.
Get in touch
If you would like an initial conversation about your plans, or indeed what you’ve been engaging in already, please contact Jon Connor, PM+M’s Research and Development tax credit specialist, by emailing email@example.com or by calling 01254 679131. This is going to be very much a growth area in the legal profession and understanding the benefit to your firm is a no-brainer.