C L I E N T
P R O F I L E
Touchlight Genetics Ltd
Touchlight are a DNA development and manufacturing company that has developed an innovative, synthetic DNA vector and enzymatic manufacturing process, which enables them to produce DNA at unprecedented speed, scale and purity. Using their patented enzymatic DNA production platform, they can support their partners that are advancing genetic medicine.
Menzies were approached by Touchlight to support the company with a broad range of accounting and tax services. However, as Touchlight prepared for their audit, several technical and operational challenges emerged. These ranged from complex accounting treatments and audit readiness to navigating capital allowance legislation and meeting enhanced R&D compliance standards.
The combination of rapid growth, multiple group entities, and the evolving regulatory landscape made it essential to address each issue with precision and coordination.
Client’s goals and objectives
- Touchlight required financial statements that presented a true and fair view ahead of their first audit by a Big Four firm.
- The nature of Touchlight’s business means they have to constantly fund development and achieving the most efficient tax outcomes is of great importance. It was pivotal for the company to have accurate and HMRC-compliant corporation tax filings as well as maximising tax relief in relation to the recent purchase of their new property and manufacturing site.
- Touchlight carry out R&D across multiple companies. The company required Menzies to ensure their Patent Box and R&D tax relief claims were accurate and well-documented whilst navigating the ever-changing R&D landscape, increased compliance rules and HMRC scrutiny.
- Touchlight were looking to prepare for their audit with the confidence that their financial statements would present a true and fair position, standing up the audit scrutiny.
Results and outcome
Accounts
Corporation Tax
R&D/Innovation
Menzies supported Touchlight in the accounts preparation for the group, to facilitate the audit of their financial statements. This was a first-year audit with a new Big 4 auditor and the client faced many challenges during the audit process, causing delays in the completion of the audit and the need for additional support from Menzies in facilitating completion.
We supported the client throughout the audit process, working closely with Touchlight’s internal finance team to meet their Companies House filing deadlines. This included advising on technical accounting matters and assisting with audit queries. Key areas of support involved the correct accounting treatment of preference shares, share options, and intangible asset valuations within a group consolidation, including necessary prior period adjustments and meeting detailed financial reporting disclosure requirements.
Touchlight encountered several challenges in navigating the complex rules surrounding capital allowances. Determining whether the development expenditure qualified for various forms of tax relief such as first year allowances, the structures and buildings allowance, and land remediation relief. In some cases, the eligibility criteria was unclear or not met, creating uncertainty around the potential for tax savings.
Additionally, in collaboration with the client’s auditors, the complex tax treatment in relation to intercompany balances was assessed. This raised concerns about the tax implications of these adjustments, particularly the need to ensure that both the debit and credit entries would have a neutral tax impact and not result in unintended tax liabilities.
Menzies carried out a thorough review of expenditure, supported by site visits to identify qualifying costs not evident from records. Reliefs were prioritised to maximise benefit, and alternative claims were explored where needed. For the intercompany balances, Menzies provided clear guidance to ensure tax neutrality and compliance with relevant legislation.
Touchlight carry out a large number of projects across multiple companies and faced challenges meeting enhanced compliance rules surrounding project disclosures within the new Additional Information Form (AIF) and accurately preparing the analysis for qualifying R&D expenditure. In addition, streaming the relevant IP profits for the Patent Box claim involved complex analysis and categorisation. With various deadlines being fixed, the work had to be turned around quickly, while maintaining high standards of compliance, accuracy and documentation.
Leveraging our understanding of the client’s industry and activities, Menzies prepared detailed and fully substantiated R&D tax relief claims, including technical narratives and cost breakdowns. A collaborative approach allowed the utilisation of work carried out by the accounts and corporation tax teams to accurately allocate the relevant R&D costs. A flexible template was created for the Patent Box tax relief claim enabling accurate allocation of IP related revenue and costs.
Solutions & outcomes
Touchlight passed their Big Four audit without issue due to the work that Menzies carried out in the areas of support, reinforcing the quality of the preparatory work. The client’s corporation tax returns and accompanying R&D and Patent Box tax relief claims were also prepared accurately and submitted on time, ensuring robust compliance and maximised tax relief.
This case study highlights how proactive, pragmatic and technically informed support can help clients navigate complex financial and tax requirements under the pressure of an external audit. By working collaboratively across functions and disciplines. Menzies were able to deliver value that went beyond compliance, driving tax efficiency and supporting stakeholder confidence.
Quote from the client
“We are really grateful to you. You really have gone beyond the call of duty on a complex project, worked late when needed, been flexible, have been calm under pressure and a total pleasure to work with. Your technical accounting skills have been fantastic.” – Anjum Ahmad, Chief Accounting Officer, Touchlight Genetics Limited
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