Supporting two ex-Dyson engineers to take vacuuming to the next level
Find out how we supported the development of the Lupe Pure Cordless vacuum, set to revolutionise the market, navigating the complexities of receiving R&D tax credits and grant funding.
Based in the South West, Lupe Technology Ltd (Lupe) is a start-up founded with a fresh outlook to take cordless vacuum cleaning suction power and endurance to the next level. Although a new business, founders Lucas Horne and Pablo Montero are certainly no strangers to the industry. They met while working together in the R&D department at Dyson and for several years the two developed some of the biggest step changes in technology within the industry at the time, named on many key Dyson patents. At Lupe they want to do things their own way and challenge how vacuum cleaners are thought of. Despite being conceived many years ago, nearly all cordless vacuum cleaners still don’t deliver on the purity of the original vacuum cleaner’s function – to truly clean by delivering powerful suction for a sustained period. To achieve this required further research, development and design and this is exactly what Lupe have done.
How we helped
Now in advanced stages of pre-production the Lupe Pure Cordless vacuum is set to revolutionise the market. The work undertaken to reach this stage also qualified for the R&D Tax Credit scheme, developing a novel vacuum cleaner technology and product platform from a blank sheet of paper. The additional funds received through the scheme supplemented state aid Lupe received from Innovate UK. A common misconception is that this type of grant funding and R&D tax credits are mutually exclusive; this is not true but does add complexities to making an R&D tax credit claim.
Prior to claiming through MPA Group, Lupe submitted their R&D tax credit through the SME scheme. Although this scheme has the most generous rate of tax credit, especially for a business pre-profit, Innovate UK grant funding cannot be included as qualifying expenditure. Grant funding can only be included in claims submitted through the RDEC scheme due to them being classed as state aid. However, submitting the claim through the RDEC scheme reduces the tax credit rate from 33p for every £1 spend to 10p for every £1 spend. Despite this, Technical Analyst Peter Barlow and Tax Specialist Connor Whelan concluded that the RDEC scheme was the best way to maximise the overall benefit Lupe received. This is because including the grant funding increased their qualifying expenditure so significantly that even with the lower rate, the benefit received was substantially higher.
Pablo Montero Co-Founder, Lupe
For a company that is still in the pre-production stage, maximising the benefit of the R&D Tax Credit scheme has provided us with vital funds. This funding has allowed us to continue developing the Lupe Pure Cordless as we work towards production and delivery.
As well as claiming R&D tax credits, Lupe also use our accounting services, with Account Manager Jack Allen preparing their statutory accounts. Taking advantage of multiple services creates efficiencies. With liaison between departments, all required accounting documents for the R&D Tax Credit scheme can be obtained without needing to go back to Lupe or communicate with a 3rd party accountant, and the same is true for year-end account preparation. This allows Lucas and Pablo to focus on the core business developing the vacuum cleaner.
What does the future hold?
Lucas and Pablo aim to begin production and delivery of the Pure Cordless vacuum by late 2019. The product currently has patented aspects, and this means that they could qualify for the Patent Box relief. This enables UK companies to pay a reduced Corporation Tax rate of 10% on profits resulting from the sale of products or services containing a qualifying patented innovation. Once the Pure Cordless vacuum begins generating profits, an MPA Group Technical Analyst will assess the potential benefit of Lupe electing into the Patent Box regime.
If you want to find out more about claiming R&D tax credits, Patent Box relief or using our accountancy services, get in touch and speak with one of our experts today!
Lupe also currently have a Kickstarter campaign running to support tooling, mass manufacturing, certification and shipping logistics. To learn more, visit their campaign page.