How do I know whether I’m conducting R&D?
If you are creating a novel or enhanced item process or solution, your company may be conducting research and development (R&D). You will likely be attempting to resolve an issue where no solution is evident. This can take many forms. And R&D initiatives can encompass work done for a client as well as your own company.
The government’s R&D definition is purposefully broad. Regardless of scale or sector, if your business is taking a risk by attempting to ‘resolve scientific/technological uncertainties’ then you may be performing qualifying activity. This could include:
Creating novel products, processes, or solutions.
Modifying or altering an existing product, process, or service to make it better.
This means that if you’re uncertain whether your project is scientifically or technologically possible or you don’t know how to achieve it in practice, you might be addressing unknowns and therefore qualify for R&D tax relief.
Where does R&D start and finish?
R&D work commences when a project seeks an improvement in science or technology and ends when the project’s uncertain elements have been resolved. Any user-testing or commercial finance broker marketing work beyond resolving the initiative’s uncertainties will not be R&D.
How do I know if my initiatives are eligible for R&D tax relief?
For a initiative to qualify as R&D, you should have set out to achieve an advance. That improvement must be in the field of science or technology, not just in your company’s own expertise. Your project can still be R&D if the advance has already been achieved but the specifics are not publicly known because for example they’re a confidential.
It’s crucial to note that R&D is unavoidably not always successful. If your project is ultimately unfruitful but aimed for a solution that was unclear initially, it could still be R&D.
What kind of projects do not qualify for R&D tax credits?
Typically, standard replication of current items, processes, materials, equipment, or solutions will not usually be eligible as R&D. Work to enhance the appearance of a procedure, substance, equipment, product, or solution will not itself be R&D. However, work to create certain cosmetic or aesthetic effects through the use of tech can still qualify.
At Hamilton Wood & Company, our team comprises not just certified tax consultants but also industry experts, attorneys, former HMRC inspectors and even a rocket scientist!
We use a constantly-updating method to create R&D tax relief applications that meet HMRC’s rigorous criteria – and maximize benefits for your company. If you’re uncertain whether your efforts qualifies, we can assist you.
