Research & Development (R&D) Tax Credits could result in a much-needed free injection of cash.
But identifying whether your project qualifies isn’t always an easy process.
Qualifying R&D work is easily overlooked when you don’t know where to look. Here are a few things to help you find out if your project could qualify for R&D tax relief.
What are R&D tax credits?
In 2000 the government introduced a scheme to encourage scientific and technological innovation within the UK. Which essentially means that if you’ve invested in Research & Development, you may be eligible to receive up to 33% of what you invested as tax relief.
By R&D and innovation, we mean a lot more than lab coats and test tubes. So many businesses lose out on valuable claims because they assume that their project isn’t eligible, or they think their business is in the wrong sector.
How to find out if your project qualifies for R&D tax credit
A lot of what you might simply consider day-to-day business as usual could in fact qualify for R&D Tax Credits.
To qualify, projects must involve carrying out R&D work in the field of science or technology, undertaking R&D to overcome difficult technological problems. HMRC have provided guidance on what types of activity needs to be present in the project for it to qualify for the relief. It’s a long old list, which takes a bit of time to work through, but there are some a few key aspects to highlight.
Has your project sought an advance in science and technology?
You’ll need to demonstrate that the scientific or technical advance extends the overall knowledge or capability in the field of science or technology and not just your company’s own state of knowledge or capability. This means that your company or experts in the field can’t already know about the advance or the way you achieved it.
Science and Technology R&D is a vast field. To qualify as R&D, the regulation narrows it down to hard sciences which includes engineering, biotech, physics, chemistry and of course, computer science.
Has your project had to overcome uncertainty?
A good test to determine if the work undertaken qualifies as R&D, is whether your project team faced uncertain outcomes at the start of the project.
The project should have been run as a distinct initiative and you’ll need proof that there is significant scientific or technological uncertainty as to whether the project could be achieved.
Can your project demonstrate research, testing and analysis?
The project must solve a problem or provide an easier, more efficient or more effective solution, which was not previously possible. You’ll need to show that the R&D needed research, testing and analysis to develop it. A simple description of the challenges and successes of the project will suffice to show your process.
Also, remember that success isn’t necessary to qualify for R&D tax relief.
Would a professional in the field find it easy to work out your project?
You’ll need to show evidence that the individuals undertaking the work have significant expertise. Another professional should not have been able to come to the same conclusion easily. If your project involved an uncertainty that competent professionals couldn’t readily resolve and where solutions weren’t common knowledge, then you’re likely to have a case.
This can be shown by proving that others on the R&D team are professionals and experts in their field. They’ll need to contribute to the preparation of your claim and explain the difficulties encountered, and/or show other failed attempts which took place to achieve your project objectives.
Putting your claim together
The process of applying for R&D can be daunting. It’s quite a complex and time-consuming process if you’re a novice, with the potential to draw you away from the critical job of running your business. But with the average R&D tax claim worth £64,562, it’s worth finding out if your project qualifies.
It’s quick and easy to sign up for a free initial R&D assessment of your project. If we think your project could qualify for R&D tax relief, we’ll work with you to help you prepare, submit and monitor the progress of your claim from start to finish. It’s risk free, as our fees are only payable on the receipt of a successful claim.
With 100% success rate of claims submitted by our team, there’s nothing to lose.
Simply email us to arrange a quick call to find out if your project is eligible.
