Cleaning up: How UK fashion can cut emissions and increase profit

he Waste Resources Action Project released a report in 2018 that estimated the global fashion industry's carbon footprint at some 2.1bn metric tons of greenhouse gas. The revelations placed the fashion industry among the world's top 5 most polluting sectors. Thankfully, rapid progress has been made since then, and UK fashion brands have been at the forefront of innovative breakthroughs to minimise their environmental impact while maintaining the exceptional quality and sophisticated style for which they are renowned. These breakthroughs in materials and processes are to be celebrated, but they come at a signifcant cost to the trail-blazing designers driving them forward.

Thankfully the UK government has support in place to incentivise this innovation in the form of Research & Development (R&D) tax credits, but regrettably, uptake in the sector remains slow, stifling innovation and leaving designers out of pocket. The R&D tax credit scheme is a form of tax relief that is intended to incentivise investment in innovation by UK companies. Claimants receive a portion of their investment in activity that improves products, processes and materials by overcoming technical uncertainties. The funding can either be taken immediately as a credit from HMRC or it can be offset against future tax liabilities.

The government – and by extension HMRC – have the environmental impact of fashion squarely in their sights, and one of the policy levers they have chosen to pull is incetivising investment in sustainability through the tax code. Naturally, the R&D tax credit scheme is doing a lot of the heavy lifting in pursuit of this goal, and consequently HMRC guidelines specify that product development, materials and process improvements undertaken in futherance of environmental harm-reduction qualify for R&D tax credits.

That's great news for fashion and the environment, but making a claim is no mean feat. Claimants need to be capable of reconciling the tax code with the technicalities of garment construction. But thankfully, help is at hand. Invennt Fashion employ consultants that understand both fashion and tax, enabling designers to produce compelling, maximal R&D tax credit claims at minimal expense to the claiming business. Invennt's consultants do all the hard work and only require a few hours of face-to-face time (remotely or in person), technical drawings and basic financial records to produce the claim.

But who qualifies? It's relatively simple, if a fashion brand employs professional staff that spend time improving the environmental performance of their products, or for that matter any appreciable product improvement, in new and innovative ways, they will qualify for R&D tax credits. To get a definitive answer, fashionistas should contact Invennt to book a free no-obligation exploratory review to determine the scale of their claim.

Since the environmental impact of fashion entered the consciousness of industry executives, designers and insiders, the industry has been among the most proactive at addressing the consequences of its business. That desire for change is commendable and by availing of the R&D tax credit scheme the sector has the opportunity to take this to the next level.

Written by Andy Hastie

Published: 13/05/2021

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