Would you believe that tax credits, one of the few reliable sources of government funding for technology companies, are under threat?
Across the pond, in Canada, where Tax Credits originated, there’s an ongoing debate about whether they are effective, whether they make a difference. From our understanding, this is largely driven by examination of the way large companies use Tax Credits. Those bigger companies take a sizeable share of the tax credit budget, and, understandably given their size and the way they determine their strategy, it doesn’t have a huge influence on their R&D spend.
Looking at smaller companies, however, it’s hard to doubt that tax credits are helping. As part of making the case for SME R&D Tax Credits, we’ve decided to highlight success stories, where the R&D Tax Credit scheme made a huge difference to a small company.
The first such company is Idioplatform, a b2c marketing automation platform. They’re not a GrantTree client, having claimed their first tax break years ago. Today, they employ 18 people and continue to grow.
In founder Andrew Davies’ own words, “Tax credits kept us alive, in the early days. They arrived just as we’d run out of seed funding, and bridged us from there onto commercial revenue.”
How did Idioplatform use their tax credit? “Given the nature of our company, where every one was focused on building IP, we were very eligible for it, and it paid for a lot of our costs over the next 6 months.”
Idioplatform got advice from an expert before filing, and that too made a difference. “Given the complexity of the scheme, it was vital to have someone who’d done it before to advise us, to ensure that we could get the maximum out of it. There are all sorts of things we wouldn’t have claimed for without getting that advice.”
Since then, through a combination of good management, sales, and government funding, Idioplatform has grown impressively to a company that employes 18 people and is hiring.
Andrew concludes: “We are a prime example of someone who got that money, reinvested it in the business, and then grew the amount of people we could employ, on the back of that funding. Tax credits really helped us stay in business at the beginning.”