Member Article

Sheffield technology business secures R&D tax relief

A ground-breaking Sheffield company which has developed unique technology to enhance online video games delivery has worked with local business advisers Grant Thornton to claim back research and development (R&D) tax relief.

Originally a spin-out from the University of Bradford, Tangentix is a venture-backed company set up four years ago and now has a nine-strong team which recently moved from Brittain Street to The Electric Works, Sheffield.

The company has developed patented technologies using new maths to compress game assets by a third, making downloading swifter, even on slower DSL connections, and so improving the user experience.

The development of this technology gives the potential for all games to move to digital distribution, giving greater convenience to users and bringing benefits in terms of margin, piracy and control of second hand sales to publishers.

Ed French, CEO of Tangentix, said: “The process of taking data and condensing it without losing image quality is extremely complex and its development has been lengthy and required considerable investment.

“We work closely with business consultant Alastair Walmsley, who acts as our financial adviser, and he introduced us to the team of R&D tax relief experts at Grant Thornton in Sheffield, led by Helen Millar.

“Over the last two years, she has helped us to reclaim some of our development costs, enabling us to invest that money in further R&D.”

Helen Millar added: “We’ve been working with Tangentix as accountants and tax advisers since early 2012 and during that time we’ve discussed with them the criteria for making a claim for R&D and the categories of costs that qualify.

“As well as going through the company’s trial balance, identifying direct staff costs, qualifying indirect costs and payments for externally provided workers, we also had to be clear which projects had been met by notified state aid grants as these would not qualify for the more attractive SME rate, which is currently an additional deduction from taxable profit of 125% of qualifying expenditure projects.

“We helped the company to identify qualifying expenditure of around £175,000 and on submission of the R&D claim, they received a cash repayment from HM Revenue & Customs of approximately £22,000.

“R&D tax relief was introduced by the government to encourage innovative businesses like Tangentix to invest in developing unique technology.

“However, it is a complex area and companies need expert advice in order to take advantage of the incentives available which could be crucial to funding further R&D and enabling these businesses to fulfil their potential.”

This was posted in Bdaily's Members' News section by Mark Lane .