Innovation brings opportunity, but also risk. And when it’s not managed properly, even the strongest ideas can cause chaos in the rest of the business.
We’ve seen great R&D projects derail because they weren’t financially ringfenced. Or worse, because the structure made it impossible to claim the tax reliefs that would have made the project viable. If you want to innovate with confidence, it starts with how you structure the work.
PROTECT THE CORE, THEN BUILD AROUND IT
One of the smartest moves manufacturers can make is to house higher risk in its own entity, separate from the main trading business. That way, if something goes wrong, it doesn’t pull everything else down with it.
Planning properly can help with tax efficiency, cost tracking, and future investment. It also means you’re ready for future grants, audits, or investor scrutiny because everything is clearly accounted for.
DON’T LOSE MONEY THROUGH POOR COST TRACKING
Plenty of businesses do qualify for R&D but never optimise the relief because spend gets buried in overheads or day- to-day operations.
We help manufacturers put the right systems in place from the start, whether that’s through your in-house finance team or with support from our outsourced business services. That way, when the time comes to claim R&D relief, everything is ready to go.
WHAT ARE THE MAIN THINGS TO ASK YOURSELF?
- Have we protected our core business from innovation risk?
- Is our structure helping or hurting our tax efficiency?
- Are we capturing and tracking qualifying spend properly?
- Would this setup hold up under a grant audit or investor due diligence?
Case Study
STRUCTURING INNOVATION TO PROTECT THE CORE
CLIENT
High-end automotive manufacturer launching a new vehicle model.
CHALLENGE
The business was preparing to invest heavily in R&D and production for a new model but wanted to minimise financial risk to the core group.
SOLUTION
Menzies advised on restructuring the business to ringfence the new higher risk project within a separate entity and on establishing a group intellectual property company to protect existing valuable intellectual property and to enable charging both within the group and externally.
OUTCOME
The new structure ring-fenced project-specific commercial risk into the relevant entity whilst structuring development processes to enable the intellectual property to be retained outside of the entity. The restructuring also enabled project cost and revenue recognition to be identified more effectively and to ensure commercial returns were made from development and intellectual property activities.
From Innovation to Commercial Success
Driving Growth in Manufacturing
