1. Role of the KTP Adviser
At an early stage, and before any detailed proposal is developed, the Adviser should obtain and appraise financial information relating to the business. The information obtained should be assessed to determine whether further information or advice should be sought from Adviser colleagues, perhaps from Innovate UK, or elsewhere. The partnership should not progress to completion of a full proposal if financial viability remains in doubt.
In case the need arises, the accounts and any other financial information will be retained by the Adviser for future reference.
2. Role of the Innovate UK
Innovate UK Finance staff can provide KTP Advisers with Mint Reports as and when required. In addition, later management accounts and/or or alternative information, if appropriate, will have been considered by the Adviser, before deciding if the business can afford the costs of participation and being able to exploit the outcomes.
Financial information required.
3. Businesses
A summary of financial information about the business needs to be provided at the Business Finance Section of the online application form.
Advisers can, in exceptional circumstances, request management accounts from listed companies. However, these are likely to contain ‘price sensitive’ information and unauthorised disclosure must be guarded against. Nevertheless, since the Advisers are obtaining the information on behalf of Innovate UK, and because it is held in confidence, no question of disclosure of a business’s financial affairs arises, and no law, rule or code will be breached if a business provides a copy of its management accounts to a KTP Adviser.
4. Companies trading for less than two years
The above paragraphs are wholly applicable only when a business has been trading for over two years. Whilst extra caution should be paid to ‘young’ companies, they do not need to be excluded from Knowledge Transfer Partnerships just because they are new. Therefore, any annual accounts that are available should be obtained, together with summary trading and cash flow forecasts. Any other forecasts and projections covering the present period and the immediate future and extending beyond the likely end date of the planned Partnership may be useful; they may be in the form of a business plan that the business has used to secure funding. In such cases, the commentary as well as the figures will help the Adviser to assess the business’s prospects.
5. Research and Technology Organisations (RTOs) as Business Partners
RTOs may not simultaneously be businesses and knowledge bases within KTP and should be encouraged to apply as knowledge bases. However, it is recognised that some RTOs have a significant commercial focus, and to participate in KTP as a business, will need to reassure and demonstrate to advisers that the project has strong commercial drivers.
Catapults, including all the constituent parts of the High Value Manufacturing Catapult, are specifically excluded from participating in KTP as a business.
A summary of financial information about the RTO needs to be provided in the online application form.
RTOs may be limited by guarantee (not-for-profit) organisations but tax changes have resulted in limited companies being set up to deal with business facing activities in recent years. The current status should be checked during the initial discussions. Those RTOs that are not limited by guarantee should be treated as though they were a business. Advisers should obtain a copy of the annual accounts to enable the financial position of the RTO over last two years to be considered.
Good practice suggests that before visiting the business for the first time, Advisers should obtain financial information on the business and develop a line of questions to put to the business, based on the information obtained. It is also considered good practice to reconcile your opinion on the financial position of the business with that of the Knowledge Base Partner before visiting the business. The Knowledge Base Partner should have undertaken some assessment of the business, including credit checks, considering that it will be requesting the business’s contribution towards the cost of the project.
6. Business that are part of a group or are owned by another business
If the proposed Business Partner is part of a group, financial information for both the Business Partner and the group should be considered. If the accounts are consolidated and the Business Partner’s accounts are not available or, in particular, concerns are raised about the Business Partner’s financial position, information on the group accounts should be provided with evidence from a senior executive in the group that the group will provide financial support to the proposed Business Partner for the duration of the proposed Knowledge Transfer Partnership.
Where the ultimate parent business does not produce accounts, a substantive letter indicating support should be obtained to support the application, along with any accounts for the group that are published, so that a broad financial assessment can be made.
The size of the group determines the amount of grant funding that will be awarded.
Care should also be taken to explore where the benefit of the KTP will accrue, especially when owned by an overseas business. It is expected that the investment from HM Government in KTP will being a return to the UK. Advisors should not support projects where there is not a significant demonstrable return to the UK.
7. Funding Organisations’ criteria
When assessing the suitability of an organisation to become a Business Partner, the KTP Adviser must determine if the nature of the project and the type of organisation meet the KTP criteria. The KTP Adviser must be satisfied that sufficient Funding is available to support the whole requirement before developing the proposal further.
8. Other funding
The business may already be in receipt of other grant awards i.e. Smart Award. It is acceptable for awards to be the precursor and complete before the KTP project starts, but KTP must not repeat work already funded by IUK or any other funding body. In general, Advisers should ensure that there is no double funding where any grant funding is indicated.
9. University Ownership and Ownership by an Academic
Businesses that are owned (wholly or in part) by the same university acting as the academic partner or academics that have a stake in the business, should be avoided as it is very difficult to demonstrate that the academic input supported by KTP is not available by other means.
Such businesses are welcome to work with another Knowledge Base if they can demonstrate that the academic partners have specific knowledge that is not available within their host institutions.
DEFINITION OF AN SME
1. The online application form requires the applicants to confirm the size of the business as Micro, Small, Medium or Large
2. KTP is currently using guidance from Companies House to help businesses establish their size.
3. Businesses that are part of a group will receive a grant rate based on the size of the group, rather than any individual part of it.
R&D TAX CREDITS
KTP could attract R&D Relief providing the project and
expenditure incurred qualify under the particular rules of the scheme and a business
seeking detailed advice about this scheme should be directed to the local
specialist unit,
http://www.hmrc.gov.uk/manuals/cirdmanual/CIRD80350.htm
KTP – STATE AID
1. The Knowledge Transfer Partnerships
(KTP) programme is determined as “Non subsidy” under State Aid.
2. This competition provides funding that is not classed by Innovate UK as a subsidy. Further information about the Subsidy Control Act 2022 requirements can be found within the Subsidy Control Act 2022 (legislation.gov.uk)
‘No subsidy’ status is only granted to organisations which declare that they will not use the funding:
- in any way which gives them selective economic or commercial advantage
- in any way which would determine the funding as a subsidy as defined by the Subsidy Control Act 2022 (legislation.gov.uk)
Publications are linked to the no subsidy status of this competition as they demonstrate that no selective or commercial advantage is conveyed. It is therefore essential that knowledge base partners publish a minimum of 2 academic papers for each completed project or create at least 2 industry focused publications per project, publicly sharing project outcomes.
