VidZone has been innovating and leading the way in music video-on-demand since its inception in 2002. It is now one of the largest online video-on-demand services in the world, with over 85,000 videos and 1.5 millions tracks, as well as being at the cutting edge of software development in its field.
Strategic Review enables VidZone to benefit from R&D tax relief
The VidZone management team was looking at ways to enhance its technical and operational development. This likely involved an element of fund raising to support a number of initiatives in the pipeline. Aware of Evolution Capital through its sterling reputation and its technology sector focus, a series of meetings confirmed VidZone’s confidence in Evolution Capital’s ability to deliver. VidZone initially appointed Evolution Capital to undertake a strategic review to fully assess all options with a focus on the maximisation of future value.
Identification of entitlement to R&D tax relief
Amongst other things, the strategic review identified that VidZone had never claimed any R&D tax credits despite its nearly 15-year focus on technical innovation and unique software development. VidZone’s investment in R&D had been enormous overthe years and, as a business subject to Corporation Tax, it was very clear that the business was entitled to benefit from HMRC’s R&D tax credit scheme.This was an obvious win for an R&D business looking to raise investment funds.
Claim review and submission
So the process of submitting claims, going back as far as possible (two years) began. To determine the extent of each claim, Evolution Capital’s expert R&D team carried out adetailed review and liaised closely with VidZone, reviewing the identifiable innovative R&D projects and interviewing and discussing each person’s role in detail. Evolution Capital reviewed qualifying costs and helped to challenge and justifiably maximise the claims, including using its expertise in identifying relevant additional indirect costs, such as utilities, materials,subcontracted expenditure and software costs.The ensuing R&D claim reports and submissions were clear, highly professional and accepted by HMRC.
Advice, planning and preparation
The company’s CEO, Adrian Workman was delighted with Evolution Capital’s work on the strategic review and subsequent R&D tax relief claims, declaring: “The Evolution team was incredible and added considerable value that VidZone would not otherwise have seen without appointing the firm. I would not hesitate to highly recommend their advisory services to anyone in the TMT sector.”
Needless to say, the non-submission of claims stopped forthwith and Evolution Capital and VidZone have been successfully working together on all of VidZone’s R&D claims since that initial strategic review appointment. Evolution Capital has also expanded its areas of advice to VidZone providing a range of other on-going strategic advisory and corporate finance services.
VidZone is now moving into the world of virtual reality (VR) and, naturally, will be continuing to benefit and reinvest from the R&D tax credit scheme to enable those initiatives to become an actual reality.
A successful outcome
The retrospective claims resulted in rapid and material cash repayments to VidZone and the business and Evolution Capital ensured they were ready to hit the ground running with the current year’s anticipated claim at the earliest opportunity. The injection of funds enabled VidZone to invest in and accelerate other pioneering R&D projects and its service offering and enhance its value.
Adrian Workman – Managing Director, VidZone
"The Evolution team was incredible and added considerable value that VidZone would not otherwise have seen without appointing the firm."