Preparing for R&D Tax Claims
Our R&D Tax Relief team have made many successful claims over the years, and for many claims the biggest hurdle is judging which projects and activities will qualify for the relief.
Qualifying R&D takes place when a project seeks to achieve an advance in overall knowledge or capability in a field of science or technology. This does not by any means narrow it down to projects involving people in laboratories in white coats, it is also about engineers, designers and many more skilled, innovative individuals.
A qualifying project can involve creating new processes, products or services, making appreciable improvements to existing ones and using science and technology to duplicate existing processes, products and services in a new way. Pure product development does not however qualify.
The project does not need to be successful to qualify. What counts is whether there was an intention to achieve an advance in science or technology, not whether the uncertainty was resolved as intended.
There are two important factors to consider when considering whether a project would qualify for relief:
- Does the advance in science or technology extend the overall knowledge or capability in the field of science or technology and not just the company’s own state of knowledge or capability?
For example, a construction company used wood in part of a project. The conventional construction method required the wood be of a certain age, but the company was able to modify a coating so that younger and cheaper wood could be used whilst still having the required qualities.
The important factor here is to concentrate on the science and technology, rather than the end product, process or functionality. In addition, there must be an uncertainty, which cannot be resolved through relatively brief discussions with peers, or by using techniques used on similar systems or projects.
- Does the project involve an uncertainty that competent professionals can’t readily resolve and where solutions aren’t common knowledge?
For example, a project for a new standard car engine which is substantially lighter, cheaper or faster to produce than any currently available or known to be possible, whilst maintaining performance levels, can qualify as R&D. However, minor and routine adjustments such as adding a secondary air filter which has already been designed and used in another vehicle, would not qualify.
It might be publicly known that others have tried to resolve the uncertainties and failed. Or maybe others have resolved the uncertainties, but precisely how it was done is not in the public domain. Either case shows that a technological uncertainty can exist.
At MHA Moore & Smalley our team have many years of experience of preparing R&D claims for clients. If you would like to find out whether it is possible to make an R&D claim for your company, then please do get in touch.
We offer a free initial consultation where one of our R&D specialists will come out to see you to discuss your R&D position and assess whether you are able to make a claim.
To discuss this further please email Jenny Trunks or call 01772 821 021.
Alternatively, you can leave an enquiry or comment in the form below and we will reply to you as soon as possible.