Research & Development Tax Credits - Pacerpole
If you’re in manufacturing and developing a new product, take the advice of Pacerpole’s Heather Rhodes: look into R&D tax credits sooner rather than later.
We’re always fascinated by just how narrow the margins of success can be in business. Take Heather Rhodes, founder and designer of the Pacerpole. Her last accountants advised her to wind up the business. Since joining Oaktree, she’s discovered the value of R&D tax credits, begun the expansion of her product line and received an offer of £500,000 to buy the business.
She refused. “It’s worth more than that,” she says.
Heather had an issue with the traditional trekking pole. “As a physiotherapist, I realised that other walking poles were really nothing more than a modern version of the walking stick. Biomechanically I knew there had to be something better with modern materials, something which enabled a more efficient walking action.”
Pacerpole was the result, its design – honed over countless prototypes - based on anatomical and biomechanical analysis. “It turned out that the optimal shape of the grip was tricky to manufacture in order to fit around a human hand. Some parts of it had to be quite thick, and some quite thin,” explains Heather, “but not too thin or they could shatter on impact with boulders when walking in the mountains.”
In practical terms, using the pole supports better posture, better breathing, effective power transmission and a relaxed hand position – so it doesn’t require a vice-like grip.
Today, the Pacerpole is a favourite with walkers and trekkers and it has enjoyed glowing reviews in the press. But there was a point where Heather felt the pole would never enter production.
Working with Oaktree
“Our previous accountants advised us to fold the business up!” she says. “We changed to Oaktree just at the point when we began to sell the poles commercially. The owner of Oaktree Accountancy, Chris MacLeod. uses our poles and really believed we could make good profits from them, which we have done for the past 5 years.”
Oaktree introduced Heather to R&D tax credits. She hadn’t been aware of them previously and had no idea just how much they could benefit her business.
“Oaktree put together the tax credit claims and helped us to identify all the costs we could claim for in our accounts.” The result has made a significant difference, although that difference could have been even greater if Heather had been able to act sooner.
“We’ve reduced our corporation tax bill by £4,000 compared to not having Oaktree,” she clarifies. “It would have been a lot more if we’d switched sooner, as our really heavy spend on R&D was too late to claim for by the time we changed accountants.”
Nevertheless, the tax credits have been put to good use: “We’ve had more funds to invest in our next product line, which should be a real blockbuster. We’re developing lower poles to help people in hospitals or with injuries, because we’ve noticed the walking supports offered by health services are really poor biomechanically.”
So how would Heather sum up her experience working with Oaktree? “From being told to shut the business by the previous accountants, we’ve gone to having received an offer to sell it for over £500,000 three years ago.”
We’d be pleased to talk to you about how our strictly fixed price accountancy can help your business claim R+D tax relief so you can boost your business success.
Friday 13 July 2018