Are R&D Tax Credits available for the eCommerce Sector?

Technical guidance - May 2019

eCommerce has exploded rapidly over the past five years and is predicted to continue at this rate, or even accelerate. In the future, more and more businesses will move sections of their operations onto the Internet so this is the time to invest in the technology of the future.

As eCommerce is constantly evolving, it requires serious investment from any company wishing to stay ahead of the competition and convert the most traffic into sales.

If your business has an opportunity to expand into eCommerce or you already have an active online platform, you might not be aware that R&D tax credits could inject a welcomed cash boost to drive your business forward.

 

What do R&D tax credits mean to SMEs?

Designed to encourage and offset costs incurred for innovation, R&D credits can also help against regular income tax outgoings, or act as grants when a company isn’t paying taxes because it is loss-making. Companies that claim R&D funding, therefore, have more cash, increased earnings per share, lower effective tax rates, and the opportunity to increase investment in areas such as staff, research, and equipment.

R&D tax credits can allow a company to:

• benefit by reducing their costs through qualifying developments

• claim a tax credit even if the company is loss-making

In order to fit the brief of research and development, your project needs to be seeking scientific or technological advances in your specific field or sector. Your project can cover various activities, which can be individually assessed when making a claim.

With regard to the online retail business, R&D tax credits can be crucial, even when you modify standard purchased software, as long as it’s substantially transformed beyond existing capabilities and features, rather than just configured for your business needs.

 

How can you use R&D tax credits in eCommerce innovation?

Many companies have already started to implement new technologies to evaluate efficiency and add new functionality to their existing IT systems. These improvements include:

– better accounting management with appropriate controls

– marketing and customer experience IT systems

– WebCommerce and enhanced connectivity with clients and vendors through improved online tools

R&D Credits are certainly worth looking into, after all, they are designed to assist development and growth as well as innovation. Company growth can happen in many areas and IT is certainly a huge part of any enterprise, as it provides a vital link between all of your business modules.

Anyone knows that software becomes outdated very quickly, so R&D tax credits can help you undertake a significant IT shake-up in your business, by providing the necessary investable cash you need.

It’s useful to determine what type of technology qualifies as innovative in terms of e-commerce platforms, and therefore benefit from R&D tax credits.

The most vital type is your company’s website. This may seem obvious, but if you choose a generic online package, you are restricted in what it can do, additionally, in the future, you will not be able to expand and add innovative crucial elements such as:

– Customer Authentication

This has become essential for any online business, and with the new PSD2 regulation coming into force in late 2019, it will be a legal requirement for online payments made by customers across Europe, you won’t be able to avoid it. Companies will be expected to create extra authentication steps for online card payments unless transaction-specific exemptions apply, otherwise, payments will be rejected and customers lost.

– Inventory control

Inventory control is vital to eCommerce, and investing in innovative systems that allow you to synchronise all your market places to live stock availability, not only creates an accurate picture of stock across all available platforms, it also doesn’t disappoint valuable customers.

OrderWise, for example, is an excellent eCommerce software package, as it enables your business to take full advantage of all the excellent benefits that online sales can offer, across multiple online platforms. Benefits include:

-Increase sales by allowing customers to enter their own orders at any time

-Synchronize order history, payments and customer buying trends

-Improve customer relationships with online account communications

-Customize themes and features to match your industry and your brand

-Completely automated management of your online trading

Online businesses should also consider investing in other innovations, such as:

– customer recognition and personalisation
– virtual reality
– shopping cart improvement and payments
– cybersecurity

 

Personalisation

Personalisation is a major factor in the development and competitiveness of an online business. Essentially, this tool selects what customers see when they click on a commercial website, so you can increase your chances of converting that visit into a sale. Not only that, but with relevant suggestions, you can up-sell and capture a potentially loyal and lucrative customer.

Kentico, an all-in-one platform for leading web-based content management, e-commerce and e-commerce systems, enables online retail businesses to tailor the content of their sites to their own customers. Parameters used include search terms, referrals, user behaviour and geolocation. Sitecore, another advanced content management system, offers similar features.

The integration of advanced systems like these, or the development of your own recommendation or customisation engine, could certainly benefit from research and development, and therefore be funded by R&D credits.

 

AI

Artificial intelligence (AI) is another up and coming area of personalisation, that could become an important area of investment covered by R&D tax credits. Once viewed as an undiscovered field of research, AI is now becoming an everyday reality and in some cases a necessity.

Thread, a UK-based company, has recognised the huge potential artificial intelligence in personalisation has to offer and has invested heavily in it, as an innovation in e-commerce. They use AI to help men choose clothes that suit them.

Sounds easy? It isn’t!

The company collects key personal information provided by customers, such as size, style, etc., and then adapts the way it selects its product suggestions from its apparel partners. This helps customers find clothes that not only fit well and are in stock, but items that the customer wouldn’t have necessarily put together, therefore providing a “stylist” service and significantly improving the buying experience.

Many retailers are attempting to differentiate themselves from competitors, especially giants like Amazon, by creating highly curated shopping experiences that combine the personal feel of in-store shopping, with the convenience of online portals.

Using AI to personalise the customer journey is a huge asset to retailers. Any eCommerce company which implements innovative plans of actions to personalise the customer experience can see their sales increase by up to 60% according to analysts.

Certainly, this is a massive return on an investment that could be successfully funded by R & D tax credits!

 

Virtual reality

This an especially exciting newcomer to the eCommerce sector. As the technology develops, online retail will be a natural deployment investment for companies, as it will enable them to totally captivate customers in the shopping experience which is uniquely relevant to them, totally new to how they have shopped in physical stores in the past. The British High Street may only exist virtually in the near future.

Virtual reality is still relatively in its infancy, however, it is hugely innovative and one of the best candidates for R&D tax credits.

 

Payment technology R&D

Developing payment options that are able to take payments from all over the world is a particular problem. Reducing issues at payment stage is an essential part of digital optimisation for companies operating online.

Electronic “wallets” are one solution that can offer interesting solutions for an innovative eCommerce platform.

Examples of heavily invested companies are the emerging Apple Pay and Samsung Pay, though other global financial services companies such as MasterCard and PayPal have also started using “wallets” which can store secured credit to use in online transactions.

Investment in this type of future technology could well qualify as R&D.

 

Cybersecurity & Biometrics

Cybersecurity is crucial in order to avoid risks of online fraud, hacking, and identity theft.

A new but growing technology in cybersecurity is biometrics: the use of fingerprint, iris and voice recognition for authentication purposes. Far superior to passwords, as the information cannot be hacked or replicated, it is the ideal way forward, however, it can be a difficult tool to integrate into an eCommerce site.

An example of a company doing innovative work with this technology is Onfido. They have developed an identity verification engine. Their facial check product uses cutting-edge computer vision techniques to provide advanced fraud detection.

The developing of biometrics in cybersecurity for eCommerce is a definite candidate for funding via R&D tax credit.

R&D Tax Credits are a fantastic opportunity for innovation and growth for many companies, and are more available than most people think. Once the concept of innovation is understood, a whole range of projects could be eligible under the scheme and will enable eCommerce to flourish at the rate it should.

For information and advice on whether your eCommerce venture might qualify for R&D tax credits, as well as further help on applying for them, get in touch with F.Initiatives at contact@f-initiatives.co.uk

R&D Tax Credits Advisors. R&D Tax Credits Experts.

 

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Privacy PolicyScope

This policy applies to F. Initiatives and My R&D Claim™ which are both trading names of F. Initiatives Ltd, a company registered in England under number 09899833 whose registered office is at 10 John Street, London, United Kingdom, WC1N 2EB. The privacy policy explains how we use any personal information we collect about you when you use this website and our wider services.

What is personal data?

Personal data relates to any information about a natural person that makes you identifiable which may include (but is not limited to):

  • Names and contact information i.e. emails and telephone numbers

  • Employee numbers

  • Payroll and accounting data


What is sensitive personal data?

Sensitive personal data refers to the above but includes genetic data and biometric data.  For example:

  • Medical conditions

  • Religious or philosophical beliefs and political opinions

  • Racial or ethnic origin

  • Convictions

  • Biometric data (e.g. photo in an electronic passport)


What is a Data Controller?

For general data protection regulation purposes, the “data controller” means the person or organisation who decides the purposes for which and the way in which any personal data is processed.

The data controller is F. Initiatives Ltd, 10 John Street, London, United Kingdom, WC1N 2EB. The data protection officer is Solenne Desprez Braun, who can be contacted at F. Initiatives Ltd, Albert Buildings, 49 Queen Victoria Street, London, EC4N 4SA or on personaldata@f-initiatives.co.uk  or by calling 0207 653 1921.

Our Full Data Governance Policy can be found here.

What is a Data Processor?

A “data processor” is a person or organisation which processes personal data for the controller.

What is Data Processing?

Data processing is any operation or set of operations performed upon personal data, or sets of it, be it by automated systems or not. Examples of data processing explicitly listed in the text of the GDPR are: collection, recording, organising, structuring, storing, adapting, altering, retrieving, consulting, using, disclosing by transmission, disseminating or making available, aligning or combining, restricting, erasure or destruction.

What do we mean by Business to Business?

PLC, LTD, LLP incorporated partnerships, trusts and foundations, local authorities and government institutions.

What do we mean by Business to Consumer?

Private clients, sole traders, unincorporated partnerships, trusts and foundations.

What information do we collect about you and how?

  1. Initiatives Ltd, as a Data Controller, is bound by the requirements of the General Data Protection Regulations (GDPR).


You agree that we are entitled to obtain, use and process the information you provide to us to enable us to discharge the Services (as defined in our Letter of Engagement and supporting Schedules) and for other related purposes including;

  • Maintaining client records to comply with customer due diligence requirements

  • Carrying out identity checks in relation to you

  • Statutory returns such as Company Tax Returns and Annual Accounts

  • Legal and regulatory compliance

  • Crime prevention.


We collect information about you when you fill in any of the forms on our website i.e. sending an enquiry, signing up for a service, signing up for an event, filling in a survey, giving feedback etc. Website usage information is collected using cookies.

When submitting forms on our website we use a third-party software provider for automated data collection and processing purposes, they will not use your data for any purposes and will only hold the data in line with our policy on data retention.

Cookies are text files put on your computer to collect standard internet log information and visitor behaviour information.  This information is then used to track visitor use of the website and to create statistical reports on website activity.  For more information visit www.aboutcookies.org or www.allaboutcookies.org.

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Analytics – e.g. how visitors use our website

We use Google Analytics to store information about how visitors use our website so that we may make improvements and give visitors a better user experience.

Google Analytics is a third-party information storage system that records information about the pages you visit, the length of time you were on specific pages and the website in general, how you arrived at the site and what you clicked on when you were there. These cookies do not store any personal information about you e.g. name, address etc. and we do not share the data. You can view their privacy policy below:

Google - http://www.google.com/intl/en/policies/privacy/

IP addresses

An IP or Internet Protocol Address is a unique numerical address assigned to a computer as it logs on to the internet. F. Initiatives Ltd do not have access to any personal identifiable information and we would never seek this information. Your IP address is logged when visiting our site, but our analytic software only uses this information to track how many visitors we have from particular regions.

Internet Based Advertising

We use Linkedin, Facebook and Twitter advertising services and as such there are tracking codes installed on our website so that we can manage the effectiveness of these campaigns.  We do not store any personal data within this type of tracking.

How will we use the information about you and why?

At F. Initiatives Ltd we take your privacy seriously and will only use your personal information to provide the Services you have requested from us, detailed in your Letter of Engagement and supporting Schedules and as we have identified above.  We will only use this information subject to your instructions, data protection law and our duty of confidentiality.

For Business to Business Clients and Contacts our lawful reason for processing your personal information will be “legitimate interests”.  Under “legitimate interests” we can process your personal information if: we have a genuine and legitimate reason and we are not harming any of your rights and interests.

For Business to Consumer Clients and Contacts our lawful reason for processing your personal information will be “A contract with the individual” e.g. to supply goods and services you have requested, or to fulfil obligations under an employment contract.  This also includes steps taken at your request before entering into a contract.

We may receive personal data from you for the purposes of our money laundering checks, such as a copy of your passport.  This data will only be processed for the purposes of preventing money laundering and terrorist financing, or as otherwise permitted by law or with your express consent.

Our work for you may require us to pass your information to our third-party service providers, agents, subcontractors and other associated organisations for the purposes of completing tasks and providing the Services to you on our behalf.  However, when we use third party service providers, we disclose only the personal information that is necessary to deliver the Services and we have contracts in place that requires them to keep your information secure and not to use it for their own direct marketing purposes.

We collect information on our website to process your enquiry, deal with your event registration, give advice based on survey data and improve our services.  If you agree, we will also use this information to share updates with you about our services which we believe may be of interest to you.

We will not share your information for marketing purposes with companies so that they may offer you their products and services.

Transferring your information outside of Europe

As part of the services offered to you through this website, the information which you give to us may be transferred to countries outside the European Union (“EU”). For example, some of our third-party providers may be located outside of the EU.  Where this is the case we will take steps to make sure the right security measures are taken so that your privacy rights continue to be protected as outlined in this policy.  By submitting your personal data, you’re agreeing to this transfer, storing or processing.  Where our third-party supplies are in the US we have ensured that their services fall under the “Privacy Shield” whereby participating companies are deemed to have adequate protection and therefore facilitate the transfer of information from the EU to the US.

If you use our services while you are outside the EU, your information may be transferred outside the EU to give you those services.

Security precautions in place about data collected

When you give us personal information, we take steps to make sure that it’s treated securely. Any sensitive information (such as credit or debit card details) is encrypted and protected with the following software 128 Bit encryption on SSL. When you are on a secure page, a lock icon will appear on the bottom of web browsers such as Microsoft Internet Explorer.

Non-sensitive details (your email address etc.) are sent normally over the Internet, and this can never be guaranteed to be 100% secure. As a result, while we strive to protect your personal information, we cannot guarantee the security of any information you transmit to us, and you do so at your own risk. Once we receive your information, we make our best effort to ensure its security on our systems. Where we have given (or where you have chosen) a password which enables you to access certain parts of our websites, you are responsible for keeping this password confidential. We ask you not to share your password with anyone.

Profiling

We may analyse your personal information to create a profile of your interests and preferences so that we can contact you with information relevant to you. We may make use of extra information about you when it is available from external sources to help us do this effectively. We may also use your personal information to detect and cut fraud and credit risk.

Marketing

We would like to send you information about our services which may be of interest to you.  If you have consented to receive marketing, you may opt out at any point as set out below.

You have a right at any time to stop us from contacting you for marketing purposes.  To opt out please email: contact@f-initiatives.co.uk.

How long will we hold your data for?

  • Marketing: We will hold your data for a period of 6 years with a review every 3 years.  You will have the opportunity to opt out or update or delete data at any point should you need to do so and details are set out in this policy as to how to do that.

  • Contracted Services: We will hold your data for 7 years in line with our regulatory requirements.


Access to your information, correction, portability and deletion

What is a Subject Access Request?

This is your right to request a copy of the information that we hold about you.  If you would like a copy of some or all your personal information, please email or write to us at the following address: Antoine Abbatucci, Managing Director - UK, F. Initiatives Ltd, Albert Buildings, 49 Queen Victoria Street, London, EC4N 4SA. We will respond to your request within one month of receipt of the request.

We want to make sure your personal information is accurate and up to date.  You may ask us to correct or remove information you think is inaccurate by emailing contact@f-initiatives.co.uk or writing to the above address.

Objections to processing of personal data

It is your right to lodge an objection to the processing of your personal data if you feel the “ground relating to your particular situation” apply.  The only reasons we will be able to deny your request is if we can show compelling legitimate grounds for the processing, which override your interest, rights and freedoms, or the processing is for the establishment, exercise or defence of a legal claims.

Data Portability

It is also your right to receive the personal data which you have given to us, in a structured, commonly used and machine-readable format and have the right to transmit that data to another controller without delay from the current controller if:

(a)    The processing is based on consent or on a contract, and

(b)    The processing is carried out by automated means.

Your Right to be Forgotten

Should you wish for us to completely delete all information that we hold about you:

  • Email: contact@f-initiatives.co.uk or

  • In Writing to: Antoine Abbatucci, Managing Director - UK, F. Initiatives Ltd, Albert Buildings, 49 Queen Victoria Street, London, EC4N 4SA.


Other websites

Our website contains links to other websites.  This privacy policy only applies to this website so when you link to other websites you should read their own privacy policies.

Complaints

If you feel that your personal data has been processed in a way that does not meet the GDPR, you have a specific right to lodge a complaint with the relevant supervisory authority.   The supervisory authority will then tell you of the progress and outcome of your complaint.  The supervisory authority in the UK is the Information Commissioner’s Office.

Changes to our Privacy Policy

We keep our privacy policy under regular review and we will place any updates on this web page.  This privacy policy was last updated on 03 January 2019 and the Version number is 1.2 in line with the new GDPR guidelines.

How to contact us

Please contact us if you have any questions about our privacy policy or information we hold about you:

  • By email: contact@f-initiatives.co.uk

  • Or write to us: Antoine Abbatucci, Managing Director - UK, F. Initiatives Ltd, Albert Buildings, 49 Queen Victoria Street, London, EC4N 4SA.


 

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