The pharmaceutical production facility that qualified for R&D tax credits

A York-based civil and construction engineering firm has been able to fund further innovation after its projects qualified for research and development (R&D) tax credits.

Founded in 1968, family-run MLC York has an enduring legacy spanning three generations with 250 years of combined complex structural building experience within the team, including industrial and commercial property design and build projects.

The business actively works on around three major projects per year, some of which span multiple years. These projects take up most of their time as MLC designs, develops, constructs, and then handles any subsequent issues associated with these projects. There was one challenging project that contained R&D activity, which went towards the two claims.

This huge project involved MLC York changing a food supplements warehouse into a pharmaceutical production facility and there were many challenges along the way. These included developing a new production line within an active workplace and creating and installing entirely unique systems that would enable staff to work safely and prevent the pharmaceuticals from being compromised due to humidity levels in the factory, for example. MLC York improved existing production flows and processes by developing the facility, and for a fraction of the cost that it would have been if done by another company. MLC’s client also wanted to achieve two accreditations, so every possibility had to be accounted for to achieve the desired accreditations and MLC had to undertake considerable feasibility studies and further development to arrive at a functioning facility.

Managing Director Steve Hargreaves and his daughter Emma Hargreaves, Financial Director at MLC York, were put in touch with R&D tax specialists Access2Funding by manufacturing specialist Brian Sainsbury, who is one of Access2Funding’s partners. They had heard of R&D before but had been told that the work they do would not qualify, which was incorrect advice that was soon cleared up after speaking to Brian.

Emma said: “Brian really gave us the confidence to go ahead with an R&D claim, his optimism and knowledge shone through and really made us feel like making a claim was worthwhile – which it was!

“As a result of the claims we have been able to offset the money received against our corporation tax bills, which has gone a long way in supporting cashflow. We are very thankful that there is less money leaving the business, enabling us to undertake more R&D.”

Owen Harvey, R&D client account manager for Yorkshire at Access2Funding, said: “MLC York is a fine example of a civil engineering company not realising how innovative their sector is. HMRC R&D statistics published in September show UK civil engineering firms are missing out on an average of £67,000, with the construction sector making up just 7% of all R&D tax credit claims for 2019-20.

“There is a huge benefit to claiming R&D tax credits, and although the number of construction claims is increasing year-on-year, I encourage those in the civil engineering industry who are not claiming to look into their eligibility for this government tax relief scheme.

“We’ve been able to ensure MLC York continues to grow and innovate. It was fantastic working on their claims, and I hope more construction businesses follow suit!”

Research and development (R&D) tax credits are a government incentive designed to reward UK companies for investing in innovation, with the incentive being a reduction in corporation tax or a cash payment.

To see if your business is eligible for R&D tax credits, visit the Access2Funding website.