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It is great to be back with another new instalment of our series, The FI Group Podcast Episode 6. Each episode we look at a new sector and aspect of R&D Tax Credits alongside the work that we do at FI Group.

Episode 6 is available to listen to on the following platforms:

Hello, and welcome to a podcast series brought to you by the FI Group. FI Group are leaders in the field of R&D tax and for over 20 years have been helping companies fund their innovation.

I’m Amber Farrington, a consultant with FI Group, and in today’s episode we are joined by two guests, Alastair Hall, Sales Director at FI Group UK and Bruce Kletsky, Managing Director of FI Group USA.

As leaders in the field of R&D tax, here at FI Group we have seen many companies grow and expand over the years. In this episode we will be looking at global expansion in depth, focusing on some useful tips for success when going global. We will also compare the similarities between the USA and UK R&D incentives. And to finish, Bruce and Ali will tell us some of their client success stories!

Amber: Hi Bruce, thank you for joining us today. Can you tell our listeners a bit about yourself and FI Group USA?

Bruce: I am the Managing Director for the FI Group US. With offices in Chicago and New York. I lead a team of technical experts consisting of tax, engineering, IT, law, and business operations.

My speciality is helping corporations obtain the R&D tax incentive. The purpose of the R&D incentive is simply to reduce corporate income or payroll taxes. I have focussed on this discipline for over 25 years and have successfully represented in excess of 600 corporations. FI Group is a strategic partner that understands business operations and develops a methodology on how business activities apply to the R&D tax incentive.

Amber: Ali, could give us some information about yourself and FI Group UK?

Alastair: Of course, a quick introduction to myself I joined FI Group about four months ago as the UK sales director, to come in, lead the sales team in the UK and really replicate the success we have had around the world. My background personally I’ve been in the R&D world for seven years, my particular experience is around R&D tax, but also with the R&D grants. Particularly in the UK, Innovate UK and Horizon Europe is our European partners and members states. But also some experience helping with the large corporates and more IP rich companies with Paten Box. In the UK our main focus is very simple, our aim is to help companies bring their emerging  technologies to market. What we look to do is to embed ourselves in their culture, so really getting a deep understanding of what they’ve done from a technological point of view in the past, what they’re currently working on and really getting an understanding of their projects and their future. With this kind of knowledge we are well placed to an advisor on all things R&D funding, help drive extra knowledge into the business and extra funds into the business. Which can only help them bring their technologies to market quicker.

Amber: Could you both tell us more about your teams in the USA and UK, their experience in R&D and what advantages this offers?

B: Advantage – Transparency and Education! Our team not only understands the R&D tax regulations, but also understands how business operate, and how to apply traditional and non-traditional business projects and activities to the R&D incentive! This approach maximizes the credit.

In the US, we have developed a customized software program that creates a structured platform that helps educate our clients and manages the documentation process. This process exceeds the IRS guidelines. Not only do we provide a written deliverable, but we also record the conversations of our client’s technical activities so that it meets and exceed the R&D tax guidelines.

A: So in the UK we are a growing sales team. At the moment there is currently six of us. Experiences range across from people who have got experience in the R&D world and people who have got experience from more of a software, SaaS related background. Its actually an amazing mix to have in our team, because we have got people who obviously know the R&D world, understand the ins and outs and can really help our clients and understand how to use it in their business. But with us, all sectors, there is always more we can be learning and if you look at the guys who have got SaaS background coming in and really the companies understand the importance of data and how to really run their company in a different way. When you couple that knowledge with the knowledge of the more experienced guys, its really allowing us to help companies to use R&D tax in different ways and help them understand that its more than a cash tool. Really helping them use it to drive either their forecasting, international growth platforms, and we are only able to do that by having such as diverse team with a range of different backgrounds. So it is a really exciting time, everyday is a school day, as they say.

Amber: Sounds like you both have a great teams! What advantages does having so much global R&D tax incentive experience offer both of your respected teams?

A: Working for FI Group is really exciting. So, at the moment we are based out of thirteen countries, and that experience on a global level of the R&D tax initiative is really helping my team deliver extra value to our clients. So not only are we able to assist them on the UK but there are so many choices now for companies, particularly as the world goes virtual. Do you set up in America, do you set up in Europe. And having that knowledge in a group that are globally based is really allowing us to add extra value to our clients, allowing them to make more strategic decisions. And the aim is the more information our clients have, the quicker and more informed decisions they can make, which should in theory allow for more sustained and prolonged growth.

B: Most of our clients in the US have a global presence. I get numerous complements because of our education, global consistency, efficiencies of our process, digital tools, transparent methodology, and an understanding of our client’s global footprint. Bottom line – this approach maximizes the R&D benefit and creates a “Best Practice”. Plus, by understanding our client’s business initiatives, we can help identify other incentives or grants, both state and federal.

Amber: Earlier I mentioned companies and global expansion. Why should R&D funding be a key discussion when expanding globally?

A: I recently wrote an article on our website about the relationship between R&D as companies expand globally. For me R&D funding has its obvious benefits, its extra cash back into the business. But really having a detailed knowledge of the funding globally is what helps companies to expand and make the difference when they’re breaking into those new markets. We know the burn rate, people get through cash quite quickly, it’s understanding having the right people, the right teams at the right time and having access to extra funds is key for me. The main things about going global and where R&D is helpful, is if you look at the success of all the companies who expand quickly internationally, its about finding the right talent and accelerating when you can hire that right talent for the business, and if you utilise research and development funding and the correct way, not only are you getting the cash, you’re getting the visibility on when cash can come into the business. You can make better, more informed quicker decisions about bringing in the right talent and that talent are the people that are going to spearhead your growth in those new countries.

B: Recently, Congress initiated the Path Act. One of the main components is that startup companies can now benefit from the R&D tax incentive. Why – because R&D activities and expenses will be applied to corporate Payroll taxes. What are Payroll taxes – payroll taxes generally fall into two categories: deductions from an employee’s wages, and taxes paid by the employer based on the employee’s wages. The R&D tax incentive minimizes both. This is a huge benefit for any company in the US that is 5 years old or less, and has US employees and wages. It doesn’t matter where the IP is, or where the corporate headquarters are located. Bottom line – the purpose of the R&D credit for a startup is payroll tax reduction or minimization.

Amber: Now, looking at global expansion and the challenges faced when growing a global tech startup, Ali what do you see being some of the main areas that might be particularly difficult to navigate when expanding globally?

A: So, companies who expand quickly, and this is my experience is taking to my clients and being apart of companies who are expanding globally, there are some significant challenges. The obvious ones, so it could be a new language, it could be time zone based, it could be cultural based. For example, you could have an amazing value proposition in your particular market and you’ve got a great way of articulating it, when you go across to different cultures and to different countries, that might not translate as you wish it to do. For example, the way that sales operates in the UK is actually very different to how sales operates in America. So, that kind of learning and immersing yourself in how business works in your new country you go to is fundamentally the biggest challenge that companies are facing.

B: The biggest challenge is finding people. Then identifying their target market and demonstrating the value of their service.

Amber: What tips for success would you have for companies looking to go global?

A: Yeah, I’ve mentioned on it a couple of times. Tips to success, for me when going global, is all about having the right people. Its people that grow your company, it is people who will put in the extra yards to get your brand out there, if you have good people you will be successful, if you don’t have the right people it becomes a bit more of a challenge so take the time to really understand the type of people that you need for that market. What I’ve found really interesting, I was doing some reading on companies who receive private equity funding and by the time companies get to their Series E funding route, on average their employs over 33% of their R&D path of their original company. So really understanding the point of when to hire a tech team is also very very critical for success. What the success stories look like, is everyone starts with a sales team, but actually you’re going to want developers in those time zones. There is going to be different requirements, different functionality needed, different tech, different manufacturing capabilities, different services you need to offer based on that local market. So having local people who understand that market is an amazing way to accelerate your expansion.

B: I have found that there is quite a bit of equity money available, especially when the company has a global presence. The Startup company must identify the quality of the job market and where is their customer base located.

Amber: Wow thanks, you’ve both highlighted some great key areas that companies should definitely look at when expanding. 

Moving on from global expansion, can you both tell me about the R&D tax incentive systems in each of your countries, the history of these incentives with any recent changes and qualifying industries and activities?

A: Yeah Amber, its really important to understand it. So the UK R&D tax scheme has been around for around 21 years now, it started in 2000. There are two parts to it. Its all around pushing the UK economy forward and the two different schemes available on offer are for companies and groups of companies that are under 500 staff. The second one, naturally, is for those over 500 staff. Now its all changing, and it will change in the future with the recent announcement that corporation tax will be rising to 25%, but at the moment for the groups of companies under 500 staff the benefit is between 25 and 33% depending on your tax initiative. So, if you’re profit making that comes as a straight reduction in your corporation tax, if you’re loss making you have the option to either take it as financial losses against tax in the future or to surrender those loses back to HMRC and take the cash equivalent. For the companies that are over 500 staff its an above the line credit, it sits above the line and that’s a 13% relief, so for every Pound you spend you get 13p back above the line. In terms of the scope of it, I wouldn’t recommend it to anyone. It is probably not the best bed time reading but HRMC talk about projects looking to seek and achieve advancements in science and technology. From my experience, that’s really companies who are experts in what they do and come across projects where they need to innovate and take their own knowledge forward and above and beyond what they can find in the public domain. So, what they can find in journals, what they can find in communities, what they can find online on Google. It doesn’t necessarily have to be something brand new, we know that competitors will keep hold of certain technological advancements as their own IP and won’t reveal it. So companies who spend time problem solving around the use of technology will typically kind of have R&D based on  the UK legislation. I’ve got clients through to big pharms, right through to some of your larger pharmaceuticals.

B: The R&D tax incentive has been around for 40 years. But the definition and qualifications of R&D has been simplified and expanded – engineering, process improvement, and executive supervision qualifies as an R&D activity. Also, activities that are frequently missed: technical sales, functional and economic production, failure, customization, materials, reliability, performance, engineering, testing.

New documentation requirements – Originally, contemporaneous documentation and time tracking were required – but these requirements are no longer required.

Amber: A question for you both, what challenges do you see for startups in the UK vs the US?

B: One of the first questions that we want to identify is if our clients research is “funded vs. non-funded”. Basically, who assumes the risk in the project. We want an understanding on how our clients get compensated, and who owns the research. This could determine if their business activities and expenses qualify. Next question that we need to identify is can a Startup utilize the credit – a Startup also has the ability to go back to prior tax years, without amending their tax returns. Utilizing the credit is at time a challenge, but the Startup company is allowed to carry forward the credit up to 20 years.

A: Great question. A question I get asked 9 times out of 10 when I’m meeting startups, I wish there was a golden answer. We know that running a startup is becoming more and more challenging from a funding point of view, we have seen over the last couple of years that private equity are taking a shift away in investing in startups and more investing into your established or high growth companies. But for me the main challenge of running a start up is two fold, its being able to articulate and get your value proposition to market. So a lot of startups will not hire a sales team early doors, and they will go down word of mouth and marketing, which in itself causes its challenge but as long as you are getting to market and getting your voice out there and you’ve got a great articulation of what you do, then that is half the battle. But for me the main challenge is when you’re brining new technologies, new services, new products to market, it is about speed. We have seen in the past the company that gets there first, typically is the company that will ride the crest of the wave. As that becomes novel, there is a new technology that changes the way that particular industry works. So investing in R&D, investing in bringing your technology, your product, your service to market as quickly as possible and articulating it are some of the biggest challenges.

Amber: Can you both share with us some successful experiences some of your clients have had in claiming back R&D Tax.

A: Yeah, success stories of some of my clients who have claimed back R&D tax, I want to keep this podcast nice and short so I wont go into too much detail because there are so many. All the success stories I have ever seen, it is not about the cash that the client can get back, but it is what that cash has allowed them to do. Once of my favourite success stories is the ones where it is helping them hire more people. So, greatest example I can talk about is a software platform. Great platform, great technology, but their biggest challenge was getting the value proposition out there. They just weren’t having enough enquiries come through, as people will know when you’re talking about something novel change is scary, so sometimes that novel solution is not always the one you look at when you go shopping for a particular service. So for them, they were really struggling to get their voice out there. As everyone will know, when running a startup you don’t automatically have an open check, you can’t invest in everything. So for them the R&D tax was a lifeline, it was the opportunity to claim back. They actually received £80,000 over their first two claims, for them it was the opportunity to go out and hire two business developers just to go and have conversations, get their brand out there, get the conversation starting and as a result the technology spoke for itself. When I worked with them they were a £5m turnover business and now they are turning over between £35-£40m, which when we started working with them three years ago so that is some pretty extreme growth. And that came because the R&D allowed them to pump the cash into a sales team which they were struggling to do because of the cash flow situation.

B: One of our Startup clients is developed personalized virtual interfaces. Originally we identified the benefit to be about $30,000 per year. After interviewing our client’s engineers, software developers and senior leadership, the credit more than doubled because their activities were “non-funded”, so they got the R&D benefit. Our experienced technical team also reviewed and identified our client’s history, accomplishments, future projects, along with their supply cost. This comprehensive review more-than doubled the credit than we had anticipated.

Amber: Finally, why should I consider R&D funding to be a part of the discussion when thinking globally?

B:The R&D incentive is one of the most robust incentives in the US, Plus, over 33 states also apply the credit. Some counties have a minimum or maximum benefit – the US has endless boundaries.

A: So why should you consider R&D funding, when you’re thinking about going global? For me, its not actually about the cash, which sounds ironic working for a company that services getting cash back into your business. For me, its about knowledge. Knowledge is power, and obviously the more informed you are the more knowledge you have, the better decisions you’re going to make. The better decisions you make the quicker you’re going to establish a foothold in what you’re doing. So the best example, and Bruce is more qualified than myself to talk about it, if you your going into America and you’re looking into R&D funding, the state that you choose can be the difference between receiving the federal scheme, or the federal and the state scheme. So many companies are unaware of this type of knowledge before they do their expansion. And sometimes by the time they have expanded to new places, new countries, it can almost be too late. There are some examples at the moment. There is an R&D tax scheme based out in Singapore which is very attractive, but some companies their natural instinct is go straight to Hong Kong, and in this virtual world that we now live in, the location of your office is nowhere near as important as it used to be 10-15 years ago. Naturally the time zone is the reason why you would love to have offices, different cultures, things we have mentioned. But, R&D funding and having a good detailed knowledge, for me is paramount to making sure that you can invest in the right areas at the right time to get the growth and sustain that growth.

Amber: Thank you so much Bruce and Ali for the insight you both have provided into US & UK R&D tax incentives. It has been great talking to you!

That’s it for this month’s episode, thank you very much. If you liked this episode, subscribe so you don’t miss out on future episodes. To find out how we can help fund your innovation, head to for more information.  We’ll be back soon, thanks for listening.

If you liked this episode, please subscribe so you don’t miss out on future episodes. To find out how we can support you in your claim, please head to for more information, or contact us today. I’ll be back in two weeks’ time. Thank you for listening


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