The recruitment industry within the UK has an important role in helping the economy to thrive, which is why innovative recruitment is paramount to the industry. Whether its helping to find new careers for people or helping industries such as construction and retail fill any gaps in their workforce, the industry is vital in keeping the UK population employed and productive. The coronavirus pandemic also brought new challenges to the industry, with millions of people within the country unable to go to work as normal, leading to a higher demand for flexible and temporary working conditions. The importance of the industry was heightened during this period, with businesses developing a greater dependency on innovative recruitment firms to keep them operational.
What is the Recruitment industry?
In basic terms, the recruitment industry is made up of various agencies and in-house professionals that work to match potential employees with available job vacancies. The industry contributed £35.9bn to the UK economy in 2020, despite being a challenging year. The majority of this figure came from temporary/contract placement activity, rather than permanent placements. Moving forward, the industry is expected to grow 7% in 2022, in line with the recovery of other industries post-covid.
What is R&D within Recruitment?
The recruitment industry is one that has considerable potential for research and development (R&D). With the coronavirus pandemic throwing up unforeseeable challenges to the industry, it in turn helped to drive the demand for innovative recruitment that could help the industry become more effective and efficient. Innovation within recruitment has focused on technological based solutions – here are some examples of significant innovations within recruitment that would qualify for R&D tax credits:
- Automation of the recruitment process, with tasks such as the scheduling of interviews
- AI software that helps identify potential candidates
- Technology that allows recruitment processes to be completed remotely
- Virtual onboarding technology
- ‘Big Data’ analytics used to find and evaluate potential employees
How R&D tax credits can help Recruitment companies
You may be thinking that R&D activity within your company could be eligible for R&D tax credits, but curious about what activities would qualify and what the benefits of the scheme are.
Varying forms of expenditure that has in some way contributed to the project will be classed as eligible for tax relief. Here are some examples in relation to R&D within retail:
- Prototypes and their testing, for example the building of an automated onboarding system and subsequent interactions aimed at assessing its capabilities
- Direct R&D staff costs, such as a head researcher of the R&D project
- Ancillary activities essential to the undertaking of R&D (e.g., taking on and paying staff, leasing laboratories, and maintaining research and development equipment including computers used for R&D purposes)
Whilst there are obvious financial benefits to be gained from the R&D tax credit system, the implementation of R&D can significantly improve the way a company operates. Increased efficiency, a reduction of costs, and enhancing the customer experience are examples of incentives that can be found when initially planning to go forward with an R&D project.
The financial benefit as mentioned is also significant. In the past, companies have used the tax credits in several ways, such as the hiring of new staff to expand their business, starting a new R&D project, and expanding their business in areas that were previously unaffordable.
The next step
Our team at Kirby and Haslam are specialists when it comes to R&D tax relief. If you feel like your company could be eligible for R&D tax credits, then do not hesitate to enquire – our team of experts will help you along every stage in the process.