Innovation in Financial Services
For pure play technology firms R&D tax credits can be an important way of funding marginal projects. Many marginal projects could not survive without this form of government support. R & D tax credits and rewards for innovation have been developed in many jurisdictions across the world as an effective way of incentivising companies to perform R&D, as all of society can benefit from technological growth. What many in asset management and associated areas don’t realise is how much innovation can occur internally in their own firms, if not their own teams. Here in the UK we have one of the more established government schemes for R&D support and this has helped us maintain Britain’s position as a key developer of technology, as well as helping cement London as the global home of FinTech or Financial Technology.
In the asset management (AM) sector awareness of the regime is low but growing, with many smaller managers unaware of the support available to many areas of development across both their business lines and support areas. Here at RiskSave we have worked with smaller managers to identify areas of innovation and potential areas to increase the use of technology, this has resulted in a 100% success rate for identifying eligible schemes, with entrepreneurial managers often creating innovative products unaware of governmental support.
R & D tax credits for FinTechs and Investment Managers
Asset managers who look into HMRC’s definition of innovation often conclude that they do not undertake activities which qualify for R&D tax relief. This is as interpreting qualification for individual projects under the current regime can be difficult, as the relevant legislation is long and can be confusing to a non-specialist.
However with technology increasingly seen as a commercial edge in asset management the amount of innovation in the industry has never been higher. The last decade has seen increasing use of artificial intelligence and machine learning and the launch of new products such as crypto-currencies, digital banks and a plethora of robo-advisors. Claiming R&D tax relief has become a vital funding source for many of these firms both FinTechs and Asset managers.
Since the global financial crisis, those of us working in financial services have needed to engage in R & D to remain competitive in a world of lower revenues and squeezed margins. Innovation can come from many departments and here at RiskSave we have seen projects that qualify for R & D relief across the front, back and middle office
R & D qualifying activities can occur across the whole spectrum of asset management activities, from fully discretionary, quantitative funds to artificial intelligence driven risk engines. Recognising this at the start of a project can help with budgeting and cost benefit analysis. Qualifying spend on R&D-eligible activities can be extremely expensive at inception and on an on-going basis, this in turn leads to significant and material tax benefits which are not always recognised let alone claimed.
Projects do not need to develop completely new technology or to share their commercial secrets to qualify; extending technological knowledge or coping with uncertain outcomes can also qualify for tax relief.
Making a claim
Our innovation team can quickly differentiate between those activities on projects which meet the R&D criteria, and those undertaken using available and existing knowledge. We specialise in Asset Management and FinTech projects and work on a no-win no-fee basis contact team@risksave.com to see how we can help.