How I know if I am carrying out R&D?
If you are creating a new or enhanced product procedure or service, your business might be conducting research and development (R&D). You will likely be trying to solve an issue where no solution is evident. This can take many forms. And R&D initiatives can include work done for a client as well as your own business.
The government’s R&D definition is purposefully broad. Whatever size or industry, if your business is taking a risk by attempting to ‘resolve scientific or technological uncertainties’ then you may be carrying out eligible activities. This could include:
Developing novel items, procedures, or solutions.
Modifying or modifying an existing product, process, or solution to improve it.
This means that if you’re uncertain whether your project is scientifically or technologically feasible or you don’t know how to achieve it in practice, you might be addressing unknowns and therefore be eligible for R&D tax relief.
Where does R&D start and end?
R&D work begins when a initiative seeks an advance in science or technology and concludes when the project’s uncertain aspects have been overcome. Any user-testing or marketing efforts after resolving the initiative’s uncertainties will not be R&D.
How do I know if my initiatives qualify for R&D tax credits?
For a project to qualify as R&D, you should have set out to achieve an improvement. That advance must be in the area of science/technology, not just in your business’s own expertise. The initiative can still be R&D if the improvement has already been achieved but the details are not readily available because for example they’re a trade secret.
It’s important to remember that R&D is unavoidably not always successful. If your project is ultimately unsuccessful but aimed for a solution that was unclear initially, it could still be R&D.
What costs qualify for R&d relief kind of initiatives do not are not eligible for R&D tax relief?
Generally, routine copying of existing products, procedures, substances, equipment, or solutions will not usually be eligible as R&D. Efforts to improve the cosmetic or aesthetic qualities of a process, substance, equipment, item, or service will not itself be R&D. However, work to create certain cosmetic or aesthetic effects through the application of technology can still be eligible.
At Hamilton Wood & Company, our staff includes not just qualified chartered tax advisers but also industry experts, lawyers, former HMRC inspectors and even a rocket scientist!
We use a continually-evolving process to prepare R&D tax credit claims that meet HMRC’s rigorous criteria – and deliver maximum value to your business. If you’re uncertain whether your work qualifies, we can assist you.
