Qualifying for R&D

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What actually counts as R&D?

Research and development (R&D) projects are at the heart of some companies’ activities, helping to advance understanding of their fields and solve a wide range of problems.

Is your business creating new products, processes and services for yourself or for your clients? Perhaps you’re changing or modifying existing practices? When innovation becomes a part of the culture, it can be hard to recognise it for what it is. But these efforts could qualify for tax relief under the government’s R&D tax credits scheme.

Relief is available no matter the size of your business, if you can demonstrate a project that sought to overcome a scientific or technological uncertainty.

Sectors and Activity

R&D tax credits are not limited to businesses in any particular sectors. R&D Taxshop has advised on successful claims for clients in construction, manufacturing, agriculture and hospitality. The key is that the R&D activity takes place as part of a project to overcome uncertainty.

Examples of eligible activities

  • Researching and developing new products or services
  • Investigating and using new materials
  • Researching energy-saving techniques
  • Overcoming traditional challenges in new ways
  • Creating more efficient techniques or processes
  • Developing safer methods and practices
  • Developing bespoke software systems or applications

This is by no means an exhaustive list – there’s a vast array of many other activities that are also eligible. It’s worth noting that you have two years from the end of your accounting period to submit a claim, so numerous past projects could still qualify too.

Not every problem is an uncertainty, but if in the course of your work you find a problem that can’t be overcome using known methods, you may have to engage in research to solve it. It’s possible this activity may be eligible for R&D tax relief.

You don’t need to provide a great deal of detail, but you should be able to explain the investigations and analysis you used in your attempt to overcome the uncertainty. You don’t necessarily need to have been commercially successful or have even found the solution to prove you engaged in R&D.

It’s often best to have someone knowledgeable in your field explain why the information was not readily available. It may be that previous attempts to solve the uncertainty have failed and you tried a new approach. Alternatively, the problem might have been particularly unique, so no existing methods could be relied upon.

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