Technology Spinouts

We've produced a booklet, Spin-Outs and Start-Ups - Common Pitfalls, containing lots of useful advice for those in the process of setting up a spinout company, or any other business. Download a free copy here.

There is a great deal of activity in the commercialisation of new technology. This may be technology developed by private individuals, within a commercial venture, or, more significantly in the Oxford area, in an academic environment. There are a number of ways in which such technology can be exploited, including licensing deals, but very often a company - a “Spin-Out” - is set up to try to develop the technology and its potential market.

A company of this type is usually funded by external investment from business angels or venture capitalists. Understandably, their desire is to see as much as possible of this investment utilised for technical research or market development. However, their awareness of good business practice and their desire to keep track of the progress of their investment makes them impose some disciplines that seem to contradict the desire to avoid spending on “incidentals”. One of these is insistence upon good financial compliance, including reliable record keeping and the submission of accurate and timely returns to the various authorities. Another is the implementation of some form of management information system to ensure the provision of timely and accurate management accounts. Yet another is to take advantage of any and all tax incentives available to the venture.

At Richardsons we have developed a flexible package of services to meet all these requirements of new technology companies, and at a price unlikely to discourage investors. We can help new companies by: -

• Implementing a system for recording transactions which will provide the basis for all financial information flow;
• Taking over responsibility for compliance, particularly:
  • By setting up the PAYE scheme and operating the payroll;
  • By registering the company for VAT and completing the returns;
  • By registering the company with H M Revenue & Customs’ corporation tax department and preparing and submitting the necessary returns;
• Preparing management accounts and associated information on a regular basis, and helping to evolve a reporting system which is useful to management;
• Preparing a detailed operating budget, based on and consistent with the financial projections included in the business plan, against which to benchmark performance;
• Preparing statutory financial accounts for presentation to the shareholders, H M Revenue & Customs and Companies House;
• Applying for, and, where necessary, negotiating with H M Revenue & Customs to claim all tax incentives such as the tax credit for research and development;

Although we are Registered Auditors and offer this service to our new technology companies, it is often appropriate, particularly when requested by external investors, to appoint a “Big Four” firm. Where a client takes this approach, we work closely with the auditors to ensure that the service is seamless and that the audit takes place with the minimum of disruption. Where we conduct the audit ourselves, we can reduce time and costs by utilising information collected during our involvement with the company throughout the year.

In addition to all of the above, we apply our normal approach of encouraging clients, at no additional cost, to communicate with us on a regular basis with questions or to use us as a “sounding board” when considering any steps which have potential financial or tax consequences. In our experience, this service is particularly beneficial to new technology companies, and, when we are asked to act, a good relationship soon develops, with frequent valuable two-way communication.

Technology Start-Ups that we already act for include Oxford BioSignals, Pharminox and Prolysis.

Who can I talk to about this?

For more information on how we can help in this area, please call or email Simon Husband or Alison McDowell. Our telephone number is 01844 261155.