Speaker 1: 0:01

Welcome to season one of stethoscopes and rugby balls. The podcast series for med tech and sports take innovators and entrepreneurs in which we hear from founders leaders, investors and advisors who have been there, done it, and got the t-shirt learn from their stories, including their successes and failures and hear their top tips for those starting out on their entrepreneurial journey. I'm your host, Steven Carter over the intellectual property works putting IP at the heart of your business. If you enjoy this episode and want to learn more from other guests, make sure you follow us and visit our website@thestethoscopesandrugbyballs.uk. Well, hello and welcome. And I'm really pleased today to be joined by Michelle Bryan, who's senior tax manager at RPG, crouch, Chapman. Um, we all know that building a business is a roller coaster, and I think we'd all agree that having the right experts on board for the journey can be crucial to success. Um, and Michelle is one of those experts. He's going to be sharing some of their knowledge with us today. So welcome Michelle. Thank you for joining us

Speaker 2: 1:07

Today.

Speaker 1: 1:10

Yeah, I'm very well, thank you very well. So, um, so yeah, so I think, you know, what we're going to try and do is we're going to get into a bit into about how you and your team help, um, businesses and startups and small businesses in particular. Um, but before we do that, um, just going to take a minute or two to introduce yourself and say a bit about what your, your role in RPG craps Chapman is.

Speaker 2: 1:32

Yes, I work for, I work in the task team at RPG cross Chapman. Um, we are a mixed task team, so we've got a private client task team and we've also got the business tax teams as well. So I work across those taxes, so do personal tasks as well as the business tax and ensuring working with these new staff, not companies to invest a lot of time.

Speaker 1: 1:59

And I guess having that crossover between the business and the personal must rate well with those startup businesses.

Speaker 2: 2:07

Yeah, it does. We can see it from both angles so we can see it from the individuals. And we also see it from the investor's side of things as well. So especially for the individuals that you're to be investing to these nets, these angel investors to invest in new startup companies. And also you can look at it from the business side of things that companies with their venture, um, and work with them as they're going along their journey. And a lot of this, as we all know that you deal with new startup companies, um, the cash is not there at the start. And this is where as accountants, we very much invest our time with these businesses and go with them with their journey and some successes

Speaker 1: 3:02

Excellent. Where my mate, he may be here about some of those a bit later, but, um, um, so yeah, and I think you're right. He's like, like it's the same way that IP, if you can work with those startups and those small businesses to get the right foundations in place at the outset, um, then it, yeah. Kind of it sets them up for success, I guess. Um, do you wanna tell us a little bit about then, and you know, you don't have to name names of particular clients obviously, but it'd be interesting. I think just to hear from you, how you typically work with a client and w what, what goals it is you're typically looking to help them achieve and take, I mean, clearly you work with different types of clients because you're saying you worked for investors, you worked for individuals, but let's maybe take the example of a startup business. What would your typical kind of project or role with MB?

Speaker 2: 3:51

So our role would be, um, we would look at these businesses, um, from the start. So we would be on their journey from that start. So looking at them with the share structure and that those that structure in, so you'd have the key founders. So we'd look at the share structure for the business. Um, you'd have the businesses which would be seeking the investment as well. So we would look, um, as to whether they would have a qualifying and trade that qualifies for this enterprise investments, um, scheme, and to be able to implement those schemes with them in the same way. As we know with there's new startups, they have keen bullies, which they bring on it start. So it's can also work with businesses to implement that share schemes. And so those employees, which a person, the work in and seen that growth with the business over that period of time will get some form of equity. They've got some form of incentive to work and grow with these businesses. And as you say, the key thing I will say with a lot of this is having those there's crucial documents in place when they start talking to the journey, does it, like I say, even it doesn't stop those changes, but where we say, when we work with the companies is let us know what you're looking to do those next steps before you do those next steps, because if you've done those next steps, and then you're asking us whether it works, if it's okay, it may be a point that you've crystallized, you've triggered some home charges. Whereas if we're aware of what your intentions are built in there, I think a lot of it's building the relationship with the client. And so those businesses and B, and it's been there through that journey. So you can guide them. We are invested in them and it's minimizing a lot of these tax charges that could arise as a result of steps that may have been done before advice has been.

Speaker 1: 6:30

Yeah, I think it's so true. I mean, it's a story you see, I guess, you know, I'm going to be talking to a number of other advisors, and I imagine they'll tell the same story, which is an ICM IP. Well, there's kind of, there's often a reluctance for the smaller companies and the startups in particular to engage the experts because they, their assumption is right. That's, that's a cost that I don't really want to incur. Now. I'm just going to get my head down. I'm going to push on. And then I'll when I've got a bit of money behind me, I'll come back to them and then I'll get the experts involved, but he goes, you're right. He goes wrong. Doesn't it. That's the thing

Speaker 2: 7:04

It does. But I think a lot of, a lot timbers account agent accountants, not speaking on this, but a lot of us which deal within these fields, no, these new startup companies may not have those funds in the early days. So we were aware of that. And now I think that's why we invest our time with those individuals, because we're aware of in those early days, they don't want to be using that money to put pay lab fees, to accountants and lawyers to implement a lot of these structures. But it's us being able, just to advise and assist in those early days. And then as those companies grow and of course be different in women, there's more cash within the business, but we are aware that the companies may not have these funds in the early days and a bit nuts where we do best our time with them to work through that journey.

Speaker 1: 8:08

Yeah. And I think it important. I think it's great. You do that. I mean, I know if, if, if it advisers like you and I can, can engage with those small companies at an early stage, and as I said before, kind of help them put those right foundations in place. Then, then long-term, they're going to be in a much better position because, you know, you've highlighted yourself. There's some scenarios that, that I'm sure you've encountered where the company is, has done something that has triggered a tax charge. And I guess particularly in your world is you can't really reverse that that's that's then happened. Whereas if they plan properly ahead of time.

Speaker 2: 8:45

Yeah. And it's changed. It's lots of bit when you start on the early days, choosing an example, you could start in the early days and you've got, um, key ki founders in the early days. So some of the founders may have re re sheet received that equity, that higher interest in the company. And of course, as tight as that journey goes on, they may not be putting as much time in the company. So then they, they may want to change some elements of that structure. But the point is at that point in time, the task that says it may trigger if they are reducing their principal interest in the company, it may trigger those tasks charges at that point in time. But if you're looking to change that structure, it's looking to do it in those early days where there's potentially lower value, which is within that company to minimize those tax charges. And that's where we say, it's key, just keeping the advisors up to speed with what you're looking to do with your journey. And we can then with you and minimized certainly that those tax charges on these structures looking to look at.

Speaker 1: 10:05

Yeah. That makes sense. And yeah, so it sounds like, I guess there's a, there's a degree at crystal ball gazing involved. Isn't there because you never know for sure. What were you going to do? But, um, yeah. And if, you know, if you can, I assume him, I mean, you can help him do some of that crystal ball gazing and sort of with the experience you've had and the number of companies, businesses, you work with clients, you work with, you presumably seen lots of, lots of things that have gone, right. And lots of things that have gone wrong and I can help suggest to them that, you know, this is something you might quite likely to be considering.

Speaker 2: 10:42

And I think that's the thing. And I think this is what you liked so much about this field, this, um, each case is different. Um, you know, no businesses the same is that there's always something as much as you've probably got some of the same principles. Each business is unique in itself. And what they're looking to do is, and I think that's what properly interests us more as advisors in with these companies.

Speaker 1: 11:14

Yeah. It keeps it interesting, doesn't it? It does the same thing over and over. Yeah.

Speaker 2: 11:19

And keeps us, and there's lots of release nothing that's there. It's what we can help with is there is loss of in incentives, tax incentives with the research and development schemes. So a lot of that, lots of these businesses will be looking at developing new technologies and trying to make that advance in science. So where we can help is work with them on these projects, what they're, what they're doing to see whether they qualify for these benefits and that the research and development scheme, and that gives more cash into the company to enable them to work, develop more on these projects. And it's the same. It works the same with employees as well, because we all know in the early stage that the employees, um, may not be at a competitive. Sometimes it's hard to get that competitive rate. So by incentivizing them and working in, they know they're working with the company on that journey. And at the end, if that journey goes well, they get that far with equity benefits at the end of it.

Speaker 1: 12:45

Yeah. I think that's right. I mean, it's, it seems to be a theme talking to various people that Pete is business is actually a lot of it is about people. And if you've, if you've got the right team and you've got the right team, they're incentivized in the right way, then you're much more likely to succeed at the end of the day. And, you know, and, and if they can bring an expert in like you who can not only help them, like put it in the right structures to incentivize the team, but to do it in a way that's, I guess, tax efficient for the business and for the employee, then it's, you know, it's going to win, win all the way around, isn't it?

Speaker 2: 13:20

It says. And I think that's the key thing. And it's also those documents because as we know, IP is going to be the most valuable, um, asset of the company is and set. So

Speaker 1: 13:33

It's to

Speaker 2: 13:38

Value asset valuable, um, as it is, the employees is that team is instead. But because those teams which work with you from the start, hopefully against the, with you not hurt. So you want to get the right contracts in place. So you're protecting the confidentiality of the company. You're kind of locking the employees, but you're hoping that you're trying to block the employees in that long-term as well. So you it's having those protections in place. So things don't end up going wrong down the line. And it works the same with the share agreement, the, the shareholders agreements and stuff like that, having that in place. Because as much as when you start on your journey, you don't know what's going to happen. They try in that journey. It's been able to, if things do need to be changed and you've got some that document in place, and you know how that can change, because you will have those family for good leaf of provisions there, which needs to be addressed at those early days and having that good advice in place in those early days. And a lot of us advisors will be there in those early days, not with huge fees for the businesses. This is why we work with these type businesses.

Speaker 1: 15:09

Yeah. I think that's right. There is, there are, I think there is still a misconception. That expert advice is super expensive. I mean, it's, I'd argue it's super valuable, but you're right. Working with the right advisors. It doesn't have to be super expensive at least in those early days, because there's this sort of, there is what it's like this for me in the IP world, there's some sort of simple, inexpensive, or even cost free actions that our businesses can take that sets them up yet is I keep going back to this idea of putting the right foundations in place, but it's sort of putting those foundations in place. That's going to future proofing as best you can and the business. And I guess it's similar in your world.

Speaker 2: 15:49

And I think that's where we see a lot of bit fall down is where those, those grade cross structure, those foundations are not in place from the start. And that's where we see it fall down and can be sold in those high tax charges later down the line.

Speaker 1: 16:11

Yeah. So you have one of the things you mentioned there was, um, R and D tax credits and clearly that's, that's something I'm fairly familiar with because of the work in the other world. I work in the nature of being an IP expert is that you are helping people protect their innovation. And if they're innovating, then they're, they're doing R and D typically, do you do, do you come across lots of businesses who have kind of misconceptions about what are they, what R and D is and how broad those R and D tax claims can be? I mean, I've, I've heard, it said, for example, as being some businesses, they say, well, you know, we, we don't wear white coats in a, in a lab. So, so it doesn't apply to us because that

Speaker 2: 16:53

No, no. And that's exactly it because we dealt with architects. Um, we dealt with, of course the tech industry, um, R and D can be in the industries, you least expect it to be. And I think it's all to do with the people are making, it's looking at those projects and looking what people are doing. And it's, it's broadly speaking, it's having that defined R and D project. It's how it's looking to achieve that advanced in science and technology with fundamental uncertainty of the outcome. And I think it's, it's what we do is we look at those criteria as to whether those projects qualify and pace of the reports, um, and data with HMRC, for the clients in obtaining these, the tax payments and the key, it, that thing is that what people, um, realize with lots of the schemes with the R and D schemes. But if you're an SME, then the R and D tax credits work up to 33 per week per every pound of R and D spent. So it's, it's a significant benefit which could,

Speaker 1: 18:19

And that's actually cash back into your bank accounts. Okay.

Speaker 2: 18:22

Okay. Yeah, they can, they can get that cash if they want that cash back into the business, or it can be rolled forward and offset the loss can be rolled forward and offset against future profits.

Speaker 1: 18:33

Yeah, yeah. Some, yeah. I mean, and it's, so it's, I was gonna say it's free money. It's not free money because obviously you're investing in the R D and having to do the hard work,

Speaker 2: 18:43

But yeah, but

Speaker 1: 18:44

It's, but it's, I can see how it could be super valuable for, for smaller businesses in particular to get that helps helps the cash flow. Basically

Speaker 2: 18:53

It does. And I think the other one that is just not widely, um, it's part of the box, and I think it, and it is a complex, uh, it is a con there's complex rules to it, but of course that's, um, the pattern box themes, as well as enables a business to get some effective rate, 10% rate the corporation tax on patent related profits. So it's one of those and other schemes that people may not know it's there and they make one of, and this is where we can assess in looking to see what those businesses qualified for these things.

Speaker 1: 19:40

Yeah. And I think you're right. I mean, obviously the pattern box is one of the schemes that's closest to my heart thinking patterns, unless you there's examples of clients I've worked with who've where pattern box has been the main motivator for them spending money on, on securing patent protection. Um, but also then you're, you're definitely right where you say it's under utilized. Um,

Speaker 2: 20:02

And that's what we have a lot with the structuring with that. The companies is, um, looking at the structure companies is advising them on that structure there, and these things can work well with each other. And as we say, we pay this businesses, say they pay enough in tax. If there is so schemes which are available, it's always worth these businesses exploring and looking at these schemes to see whether they meet their qualifying criteria is

Speaker 1: 20:34

Okay. So if you sort of think about an ideal client, what, what would, what would be, yeah, I guess, what am I trying to think? Would you, would you sit down with it in an ideal world? Would you sit down at a, start up out of the point in time, even maybe before the company is formed and just map out based on what you think your future is going to be,

Speaker 2: 20:58

That's it. So we would sit down and this is really getting to know their idea. I think that's the thing is, you know, when you really get to know the clients, you can win as advisors. If we really get to know those tights and what their idea is, what state, which it, we can offer that best advice. And I think sitting down with, um, clients at their early stages, when that idea is for meaning to something and being able to work with them from those early stages. And it's interesting it's

Speaker 1: 21:36

Yeah, I agree. I like nothing more than sitting there with a sort of yen embryonic company and really into the detail of what, what their dream is in a way, isn't it, it's kind of what,

Speaker 2: 21:49

And it isn't, I didn't, that's how we worse work so well with clients because it's, um, it's them also being able to, they can just pick up that phone to you as well. So there's none of this concern, less, they feel conscious about asking because they're not silly questions to us because we do, they are a lot of those at that side, that 10 minute call, we can put so much detail our call, which can help clients, and we can give them that appropriate advice. And hopefully down the line, it's minimizing those tax charges for them. And they've got that robust structure in place. Um, because of course with some of this, um, the clients who have those Nat journey in those early days, but ultimately they may be looking to kind of exit late and on or so their ideas that company later on. So it's where we worked with them from the start in those early days, goes through that journey with them. We also work with them at the end stages as well, because that then this is where we see a lot of it come out, um, on chief diligence on sales thinks that if the correct paperwork is not being put in place, um, it can get very costly when you come down to those two diligence process. And that's where thought it can't, you can end up where you've tried to say it can end up being added on at that later stage and become quite costly if the pay the relevant documents have not been put in place, the advice has not been sorted the appropriate times.

Speaker 1: 23:49

And I guess worst case like deals can collapse, or you just end up not being able to really extract any value you end up paying up.

Speaker 2: 24:01

Yeah. And we've seen it very much seeing that. And a lot of it, even when a lot at like the pattern box will come out when you'll go, when you've got company, which is saying, because the purchase of once understand whether they can qualify that they've got that pattern box relief there as well. So it can help. It helps them negotiate and stuff like that. So it's, it's just key. Um, Besides enough, can you just have happen that advice there? And I think probably even businesses, uh, I think they've got to, they've got to choose, they choose those advisors they work with, and they've got to be able to get on with those advisors they work with as well, because those are prices going to be key to that journey as well.

Speaker 1: 24:55

Yeah. It comes back to people again, doesn't it just having, having trust in the, in the wider team that you're working with, not just the people within the business, but that ecosystem of, of advisors that you're working with too.

Speaker 2: 25:08

And I think that's what, that's what we do kind of pride ourselves on a lot as well, because as much as spirit, medium size fan, um, we do still adopt those for them. Um, it's was as well because clients will have that one point of contact. And as much as clients are probably aware, it may not just be that one point who's dealing with all the work connected to their business, but they know they can just go into that one advisor, that one point of contact. Um, and then it's that one, once it comes back to which will then manage that process within our teams.

Speaker 1: 25:50

Yeah. That sounds good. Says, yes, he is that kind of personal relationship rather than kind of faceless organization

Speaker 2: 25:57

Keep that personal relationship going with the clients because as us as individuals, can we look for advisors in our own personal affairs? That's what we probably look for as well to have that personal, um, context as well.

Speaker 1: 26:14

So one of the things you mentioned earlier was how you, you sort of see it sometimes from the investor's perspective as well, because you're working with those investors to, to help them invest in a tax efficient way. But does that, do you, does that mean you have insight into what it is an investors looking for in the business, but I guess particularly from the context of the work, you know, so do you, I'll ask this question in a very long-winded way, but do you, when, when you've been working with a small business and you've had the opportunity to put in place, all of those career foundations, have you, have you seen how that's helped them, um, get investment more easily or is it not made too much of a difference, or I guess what, what impact on the ability of a company to get investments as the work that you're doing typically typically have

Speaker 2: 27:10

Some of the work you do with some of the smaller companies, which will go more to individual investors, um, from that side of things, because they're seeking, um, those individual investors. So we're seeing whether those individual investors would qualify, um, for the relief, because some of them, maybe some investors, some of the larger investors may not be too concerned about tax relief, but some are Besters investing in. Um, some of the fans are more, they are their investments. They're more interested in those tax reliefs, um, which they getting back from these schemes. So that's where we will work with these investors. And it's more in a privately it's more private client side of things because we're working with them on that tax leave side of things. So we're having to know more about their individual sources of income as to whether they would get sources of income as to whether they would get that tax relief. And it's, I think when it comes down to the investors as well, it's a different businesses, isn't it? Because some companies will want investors. I'm not getting to investors, which are more hands-on on they within the company. Um, whereas if you go crowd funding, so that investments coming from that are then looking at it's, they're just putting their investment in. So they're quite hands-off with business and tech. So I think this, the key thing is when, um, raised a good, um, when there is with investors with the person sitting in that early stage is they are get getting into bed, use that term with these investors. So they that's quite key as well that they need to be able to work with those investors government. Um, and I think that's quite key when these businesses are stirred staff now in these early days, as well as to what they want from their investors.

Speaker 1: 29:36

Yeah. I think that's it, again, comes back to the people thing again, doesn't it,

Speaker 2: 29:41

It fit does.

Speaker 1: 29:45

Um, I think it's true. And I guess that is, that is typically the way the world works. As many of you have, if you have a good team and you have good expert support and you prepare to, to all, all sides of repair to invest in making that business successful, then it's much more likely to succeed. So, yeah.

Speaker 2: 30:03

Yeah. And that's our role, that's ultimately what we want to see with these businesses as well.

Speaker 1: 30:11

Exactly, exactly. Yeah. I mean, cause if you, if you help create successful businesses, I'm one, I guess, potentially they go on to become bigger clients of yours and help you succeed too. Um, but also I guess, you know, it's, you've, it gives you a good feeling and it also allows you to demonstrate, um, the quality of your, of your work and your business and attracts more, the new smaller vans that you can then go on to help succeed and then carries on forever. Doesn't that say?

Speaker 2: 30:43

And I think that's the key thing is no business, not all ideas come to fruition, but you pro you tend to find with a lot of these entrepreneurs, they will go on to another venture and another venture. So they it's, it's, they're interesting people to work with because there is this. And like, we can deal with that practical side that those can count staff tax side of things, or structuring side things like that, leaving them to focus on what they do best and everything else is putting into place. Um, but they're doing, they're working on what they do best and

Speaker 1: 31:41

Play to their strengths in that.

Speaker 2: 31:44

That's how a good team works is to realize your team and your strengths. That's what

Speaker 1: 31:49

It is. Exactly. So, listen, I'm kind of conscious that we're probably coming towards the end of the time that we don't have for this. Um, I've got two, two kinds of questions I was going to finish on. Um, so one, um, the first one I'm going to ask is, so, so thinking about kind of the, you know, the experience you've had and, and, and your knowledge, and particularly that, that kind of expert advice that you provide to startups, if there was one piece of advice. Um, so you're in Alaska, one piece of advice to it, technology startup. So just, they were just starting out on their journey. You've got, got a great idea looking to build a product that's going to change the world. What would that one initial piece of advice be to them? Would you say,

Speaker 2: 32:33

And get the right advice from the right advisors? Yeah, yeah. That advice from these stages.

Speaker 1: 32:43

Yeah, definitely not going to disagree with that. So, um, and then just to finish off one, one final question, um, so would you rather fly on a magic carpet or own an invisibility cloak?

Speaker 2: 33:00

I'd have to say, I have to be in disability clothes. I've have so much[inaudible]

Speaker 1: 33:09

Okay. We'll stop that. We won't get into what that fund might be. That was, well, listen, Michelle, it's been a great pleasure talking to you. Um, I think there's lots of nuggets in there that our listeners will really benefit from. Um, and to have the opportunity to talk to you again soon. Um, but yeah, thank you very much for taking the time.

Speaker 2: 33:29

Thank you for inviting me and thank you for your time, Steven. Thank you.

Speaker 1: 33:33

Bye now. Bye. Thank you for listening to this episode of stethoscopes and rubbed peoples. Don't forget to follow us. So you don't miss future episodes and look out for season two coming early in 2022, I've been your host, Steven Carter of the intellectual property works. If you want to connect with me or our guests, you'll find contact details in the notes and on our website, stethoscopes and rugby balls.uk. And remember as a way to do it better, go find it until next time. Take care.