28 Nov 2018

R&D Through the Ages – Karl Benz

Chris Stuttle
Senior Consultant

Karl Friedrich Benz, born 25th November 1844, was a German engine designer and automobile engineer. At birth he was named Karl Vaillant, following the tradition of taking his mother’s maiden name, and was renamed at the age of two as Karl Benz in memory and following the death of his father. After a hard-earned education, he followed his late father into locomotive engineering, followed by employment in bridge building and weighing scales manufacture.

Resulting from some bad business decisions made by his business partner, Karl’s fiancée eased the financial difficulties of his Iron Foundry and Mechanical Workshop by purchasing shares using her dowry. After this, to improve the profitability of the company, Karl went about investing significant amounts of his time developing a reliable two-stroke engine, which he completed (31 Dec 1878) and patented in 1879. When Karl Benz made this discovery there were no R&D Tax Credits, but here we have a little fun and ask: “how could R&D Tax Credits have helped?”

Because of TBAT Innovation’s experience in the automotive sector Karl contacted them directly, enquiring if there was any possibility that they could help him. After a detailed, focused and direct phone call between the two companies it was clear to TBAT Innovation that R&D Tax Credits could be claimed for previous works, the developments undertaken in the two financial years before, and support ongoing works.
Following further in-depth conversations TBAT Innovation were able to assess the expenditure over the previous two years and ensured that the financial claim that was being submitted met all HMRC’s requirements. Furthermore, after these conversations about the work that had been done by Karl and his team, TBAT Innovation wrote up a detailed and thorough evidence report. Throughout all this, because of the experience TBAT Innovation have with the automotive sector they were able to guide the conversations to produce the best financial claim and evidence report for Karl.

Following the return of a significant financial tax rebate, Karl was able to reinvest this money into his company. Furthermore, with ongoing work, Karl clearly now understood which elements of expenditure were eligible for R&D Tax Credits, thus recording this at the point of item purchase and encouraging expenditure that received these benefits. From this he was able to further his work, thus developing and patenting: a speed regulation system, an ignition using sparks from batteries, a spark plug, a carburettor, a clutch, a gear shift, and a water radiator.

In subsequent years, Karl continued to have an ongoing relationship with TBAT Innovation. Because of this Karl further developed his love for bicycles and the four-stroke engine by combining the two, creating the first ever horseless carriage to be propelled by its own power: the “Benz Patent Motorwagen”.

Because of the change in company activity and the significantly increased levels of innovation being undertaken, TBAT Innovation used their already established and strong relationship with HMRC to discuss the R&D Tax Claim prior to submission. Through these conversations HMRC and TBAT Innovation de-risked the claim process, removing any possible HMRC enquiries and investigations following the submission of the R&D Tax Claim by ensuring all elements of the claim process were sufficiently documented.

Ever since these events, Karl’s company, with support and advice from TBAT Innovation, has been motoring forward.

If we take Karl Benz’s developments as an example – some of the potential areas he could have claimed are:

  • testing of the engine and implementing new materials to make it more reliable/efficient
  • implementing new manufacturing processes to increase efficiency of the production line
  • testing to find faults and creating new products/parts to rectify
  • developing safety features for his ‘Motorwagen’ such as brake lining
  • new product/parts such as the pivotal front axle, clutch and gear shift

The UK automotive funding landscape is vast – there are multiple funding streams available for different types of development within the sector.

With TBAT’s automotive expertise and experience, we have helped businesses access millions in funding from these competitions; a notable project we have worked on is aiPod’s successful CAV application, securing them £2.85 million – you can read the case study here.

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