Case Study
A case study on R&D Tax Credits for plant breeders, Blackman Agriculture.

Within this case study, we focus on a Research & Development (R&D) Tax Credits claim for plant breeders, Blackman Agriculture. R&D Tax Credits in agriculture requires the same level of innovation as any other industry, so we showcase the cutting edge science being conducted on a daily basis.

Industry – Agriculture
Number of years claimed – 5
Type of claim – Research and Development (R&D) Tax Credit and The Patent Box

R&D Tax Credits in agriculture

Research and Development (R&D) Tax Credits for the agricultural sector

Companies specialising within the agricultural sector are often on the cutting edge of science. Whether by specialising in new technologies and equipment for cultivation, the processing or harvesting of products, or in the development of new plant varieties or breeds, R&D is taking place.

Blackman Agriculture Ltd was established by plant breeder, John Blackman, in 2014. Since then, the Cambridgeshire based company has built a reputation as one of the leading plant breeders and sell their pioneering varieties of cereals both within the UK, and internationally.

Each of the new cereal varieties that they breed, are designed for a specific environment, geographic location and end use. As a result, Blackman Agriculture are responsible for premier wheat brand names including: Mulika, the UK’s market leading breadmaking spring wheat; Monterey, developed primarily for the export market and biscuit making sector; Delphi, which is suitable for distilling and Belepi,

which offers a wide window for harvest with suitability for domestic and export milling.

Their latest variety is being specifically created for northern parts of the UK, which experience lower levels of sunlight.

Blackman Agriculture’s barley, variety 776, which was specifically developed to thrive in the growing conditions found in New Zealand, by Blackman Agriculture, made it into the Guinness Book of Records in 2015, when a New Zealand farmer recorded a record breaking harvest at his farm in Timaru, on the South Island. The world record harvest of 13.8 metric tonnes per hectare, was achieved and ratified by the Guinness Book of Records.

The challenges of claiming R&D Tax Credits for plant breeders, Blackman Agriculture.

Fiscale have been working with Blackman Agriculture for a number of years, seeing them be literal leaders in their field, while developing high yielding and disease resistant varieties of wheat. It’s a time consuming and complex process, with each new strain of cereal taking years to develop. However, the team at Fiscale have thoroughly enjoyed getting to grips with the complexity of the research undertaken, to understand the pioneering work being conducted. It’s only when fully understanding these process that Fiscale were able to identify all the key elements that could be covered in a claim for R&D Tax Credit.

When it comes to plant science, the technical uncertainties must be managed through extensive analysis, testing and field trials. Fiscale were in no doubt from the outset, that Blackman Agriculture would satisfy the criteria set by HMRC for R&D Tax Credit eligibility. However, the challenge would be to articulate each of the uncertainties, along with explaining the impact that the diversity of characteristics, genetic sequences and the interactions between different plant strains have on new product development, before calculating a monetary value to that process.

To successfully claim Research and Development (R&D) Tax Credits for plant breeders, we need us to demonstrate that our client were:

producing new products for R&D Tax Credits

Producing new or improved products, processes or services

Technological uncertainties of furniture manufacturing for R&D Tax Credit

Design and development of those products involved technological and scientific uncertainty

The biggest challenges that Blackman Agriculture face are related to uncertainties involved throughout the breeding process; these uncertainties start with determining the biological outcomes when crossing breeding plants – will one parent plant work with another? If so, what attributes will they inherit?

Disease resistance is a critical factor for any crop and is often the reason for developing a new breed to begin with. Uncertainties abound when anticipating the types of diseases that may develop in the future and in considering whether a new variety will be disease resistant. Climate change increases the scale and frequency of emerging plant diseases, throwing another unknown variable into the equation.

When considering that additional uncertainties arise with the environment where the grain will be grown, the different soil compositions, the previous crops grown on the land and how different climates will affect both the yield and the quality of the crop, you start to see just how many factors need to be taken into account. Each of these offer uncertainties which need to be overcome during the research and development (R&D) process.

Once these have been addressed, the wheat variety must be added onto the National List before it can be certified and marketed in the UK. Following the National Listing, if the variety meets the criteria of the Agriculture and Horticulture Development Board (AHDB), it will require a further year of testing and if successful be added to the Board’s Recommended List. One of the criteria required for this classification is that the wheat has “a 2% yield advantage compared to current varieties” or other compensating factors.

Since yield and quality are directly influenced by the weather, which is at best unpredictable, the testing phase for any new variety of cereal can last over several seasons and it can take years before a new variety is commercially available.

How Fiscale helped to claim R&D Tax Credits for plant breeders, Blackman Agriculture

Blackman Agriculture was introduced to Fiscale by their accountant, who acknowledged the specialist nature of the R&D Tax Credit scheme. Fiscale were an obvious choice, based on our perfect record in making successful R&D Tax Credit claims.

Fiscale’s Technical Director, Stephen, uncovered the true complexity of the research and development activities taking place, during their initial meeting.

This was the first client that Stephen had dealt with that was involved in biological research and development. It was a different concept to the commercial and industrial research projects with which Stephen had previously been involved. The level of uncertainty was much higher with so many contributing factors of which there was no control.

Another really interesting element to Blackman Agriculture’s claim is that they’re also eligible for another of HMRC’s “innovation relief” programmes, The Patent Box.

The Patent Box is a hugely beneficial tax regime, which effectively lowers the eligible company’s Corporation Tax liability to only 10%. This is for profits relating to any intellectual property (IP) that they hold. By Blackman Agriculture holding Plant Breeders Rights (PBR) on the new plants that they have bred, they’re eligible to claim under this incentive too. Plant Breeders Rights are essentially patents on new a new varieties of plants that have been bred, discovered or developed by a company or individual.

The Conclusion

The turnaround from the initial contact phone call to the successful submission of the claim was approximately four months.
John was delighted with the amount of the R&D Tax Credit relief received that he could use to offset against future profits.

Without Fiscale, I would never have claimed and received R&D Tax Credit.

John Blackman Managing Director, Blackman Agriculture Ltd.

Call Fiscale Today!

Why not contact us today to discuss your business’ R&D tax relief? It only takes our team around 20 minutes to determine if you are eligible or not.