Within the UK process sector, demands for excellence, innovation, invention, R&D and new product and process design are now the leading imperatives so all companies should be aware of the powerful and increasingly valuable corporate tax incentive now available.

Qualification for R&D Tax credits as an SME (up to 500 employees) and large companies (LC) is simply to be registered as a UK company and be a going concern.

So all companies and the broadest ranges of activities are covered.  Opportunities for the process industries are clearly among the most eligible for tax credits. The options are manifest. 

If you are part of these industries, examine everything you do as a start to identifying those elements large and small, signification seemingly trivial that give your activities, products and processes their commercial, technical and functional edge. 

Do not doubt or underestimate your own ability to undertake R&D even when, possibly, you didn’t realise you were doing it anyway!  Don’t be over interpretive as to what might constitute R&D for this purpose.

If research and development leads to patent IP possibilities, you can claim additionally via the ten-per-cent Patent Tax Box scheme.

Take-up of R&D Tax Credits is relatively small. In some ways it is a disappointment to the Government that more companies have not taken this opportunity to develop and make R&D part of their normal operational structure. 

Key drivers’ for all directors and their key executives to look at are:
• Identifying the actual wide scope and definition of what is likely to be accepted as R&D.  HMRC’s CIRD Guidelines refer generally; however, interpretation is required.
• You can claim the last two accounting periods 2011- 2012; the current year 2013 and then year-on-year.   The scheme encourages continuity and commitment.
• Identified R&D should be briefly and accurately written up to indicate research and development with relevance to your accounting periods.
• Don’t be over-ambitious and attempt to identify too much, concentrate on the small, seemingly marginal effects of design, research, test, trialling, innovation, prototypes, failures, successes and those key inputs, changes, adaptions, materials and spark-of genius or luck that created a new or better way. Begin to think R&D.
• Identify all key people likely to be involved in any way with R&D or activities involving innovation, meeting clients, technical, cost-efficiency and functional demands.  These must be your key drivers who are also likely to be directly or indirectly involved with what you need to identify and associate as R&D.
• A driver is not to forget or miss the accounting period deadlines.  This is expensive if missed.

The outlook for R&D Tax Credits is now good.  It is here to stay and to be part of the UK drive for speciality products and processes.  Resolve to get involved. Specialist assistance is available and you should seek it to get going and create an internal model to recover or save taxes going forward.

Greville Warwick Director
MSC Corporate Strategies Ltd
www.msc-corporate.com
01926 512 475

Many manufacturers across Europe and, indeed in all world regions, are still using Windows XP within their organisations, - even though Microsoft will stop supporting the operating system from 8 April 2014.

Growing concern over cyber security, however, is likely to force these companies to upgrade sooner rather than later, particularly as Microsoft will no longer write security patches for any new vulnerabilities that emerge. 

Following the Stuxnet and Shamoon attacks in the region, Middle East countries are taking a lead on this issue.

Under a recent decree in Saudi Arabia, for example, companies will have to upgrade to Windows 7 and Windows 2008 from this December, reported Jay Abdallah of Invensys' cyber security team for the EMEA region.

This follows an earlier mandate by the Saudi rulers requiring every single plant to have 'demilitarised-zone' protection against cyber attacks since July 2013, Abdallah explained in a recent presentation on cyber security developments in London.

Otherwise, Saudi-based companies lost connectivity to the corporate network, preventing them from sharing emails, scanning the web or sharing alarms or historian data.

"The people that are going to be most affect are those higher up," said Abdallah. "The operators will still be able to run the plant but they won't be able to share any data with the corporate network."

These measures are clearly justified, Abdallah noting that since 2010, there has been a 600% increase in industrial control system and SCADA vulnerabilities.

"I have never seen that in 15 years of tracking," said the IT expert, noting that the attackers are increasingly targeting oil refineries and other critical infrastructure facilities, including an average  of 10,000 cyber attacks a month on power companies,

"These days, these are very targeted attacks with specific knowledge of a vendor or a platform. They are bringing in experts or ex-employees that know the industrial control system, PLC or SCADA system inside out to achieve complete infiltration. It is no longer a drive-by shooting, it is targeted at specific company."

The Shamoon virus, for example, hit three Middle East energy companies. Spread by USB then Microsoft auto-propagation services it affected around 42,000 systems, causing millions of dollars worth of damage. The attack hit only the corporate level domain and did not disrupt industrial control systems.

While Shamoon was written by amateurs, Abdallah said Stuxnet was written by experts for one specific SCADA system to cause physical damage to a nuclear centrifuge in Iran.

By telling the operator all was well even though the equipment was spinning to a point of destruction, it delayed Iran's nuclear programme for at least two years, he said.

The worrying thing, continued Abdallah, is that these viruses or malware programmes are now so sophisticated that they can actually sit dormant for an average of five years  before they are ever detected.

He concluded: "If the technology is not up to date to track the newest versions of the threats, then we may never know that there is something wrong with the environment.

"The question is not re we ready for the latest attacks, but rather are we ready for what has already happened."

Pressure to reduce costs across the process supply chain is prompting companies to reconsider their automation-buying strategies, according to an executive of systems integrator Capula.

While there now is a growing pipeline of automation project in the UK, approvals for some larger projects are still being delayed, said Simon Coombs, business development director of the independent SI, focused on energy and utilities markets.

"It is momentum with these large projects that makes all the difference," noted Coombs, adding that even clients with strong balance sheets and good access to funding are not starting projects without a "clear and compelling" business case.

For example, he said that "obsolescence upgrades and interesting demonstrator projects that historically were done simply for engineering reasons are tending not to get approved."

Capula specialises in combining automation control and real-time IT with electrical and instrumentation systems. It increasingly has to demonstrate how these projects clearly benefit clients' businesses with defined approaches to minimising delivery and risk.

These demands, said Coombs, are "increasing the importance of effective automation control and real-time IT solutions ... and of having domain expertise and proven credentials - in addition to a good price, of course."

Over recent years in the automation and drives sector, companies have tended to buy products from the main global vendors. This has been seen as the best way to keep up-to-date with the latest R&D and standardisation requirements across different markets.

But Coombs said the need to reduce capital or operational costs means clients are "looking for innovative approaches that can decrease the delivery and the whole-life costs of solutions.

However, he added, this is conflicting with the trend by large, global automation vendors "to steadily increase the price of their products year-on-year in response to increasing energy, materials and manufacturing costs."

With system integrators being squeezed between these conflicting pressures, Coombs concluded that a future trend might be "the re-emergence of bespoke, innovative products from smaller, nimble vendors that can provide more cost effective, albeit less standardised solutions, for our clients."

Support for tried-and-tested energy from waste (EfW) technologies and scepticism over newer alternatives seems to be the order of the day for major players in the waste management industry.

Among the technologies to have earned its spurs is anaerobic digestion, according to Adam Read, practice director responsible for waste management and resource efficiency at Ricardo-AEA – an international consultancy covering global energy and environmental issues

"While the UK might not have the 1000s of facilities operating that the government predicted, AD is now proving itself as long as you've got the feedstock quality and the site and markets," Read told delegates at the recent Green in the City conference in London.

CHP with large- or medium-sized thermal facilities was another viable and deliverable technology and would play an increasingly significant role in the UK's energy security over the next five to 10 years, he forecast.

"I am a big fan of heat production in terms of thermal efficiencies but you can only do that if you have got a heat-user on tap nearby: logistics centres, refrigeration units, industrial units all make ore sense than an old landfill site in the middle of nowhere," he said.

On the other hand, while he saw a role for newer technologies such as gasification and pyrolysis, Read would "not be putting my money into any just yet: "Give it another year and I think you will see some newer facilities operating to give us more comfort about the scale of those projects and the quality of the feedstock and the outputs. "

Axion Polymers processes rigid waste plastics and ELV shredder residue at plants in Salford and Manchester , Company director Roger Morton emphasised the need to be realistic about the chances for newer schemes, particularly in the areas of gasification and pyrolysis.

"We have been working on that for up to 12 years and I am also having to say the same things like gasification to make liquids doesn't work without a very expensive gasifier that is fed with oxygen, There are lots of air-blown gasifier projects that claim to make liquids, but don't believe it.

"Another myth is that pyrolysis of biomass can make a usable liquid; it makes a horrible soup of disgusting carcinogenic chemicals. You can make it with a great yield but not a reusable liquid fuel."

A better bet, perhaps was fuel-from-plastics. This technology, said Morton, is showing promise but still required more effort to get the waste plastic clean enough to give a good yield in a pyrolysis plant than simply making recycled material from it.

"On the whole we think that mechanical recovery is a good idea," he said. "If you are going to burn it, and usually about half of our material is burned, then a lot of the pyrolysis and gasification technologies around are really incineration by another name only more expensive.

However, the choice of which EfW technology to back is no longer just a game for big guys within the waste management industry, according to Peter Jones of Ecolateral.

"People at big companies like Air Products and IneosChlor are reading the Ofgem report warning that we could be having brow outs next year. If you think about the political impct of brown-outs in Jan, Feb March 2015 just before a general election. These are big energy users are going to start putting in  facilities and making them work,

For the major chemical and process companies, EfW offers a way to reduce their exposure to the vulnerabilities of the international coal, gas or other energy markets.

"Those are the people that are going to  move in: we are just in this phoney war period," the waste management expert concluded.