What is R&D?
We need to be sure ...
To succintly define R&D for the purpose of creating a valid tax relief claim really is not easy.
HMRC give us the following:
These questions should all be answered ‘Yes’ for it to be an eligible Project:
- Am I seeking an advance in a field of science or technology? (Or are you using science or technology in your project(s)?)
- Does the advance 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? (If you're just playing catch up with industry standards, then this probably won't count, but if you're creating a solution that a competitor has already managed, but how they did is is not known, then this is very likely to be eligible R&D).
- Does the project involve an uncertainty that competent professionals can’t readily resolve and where solutions aren’t common knowledge?
To give this some context a comparison is beneficial.
Unlikely to involve R&D
- Creation of websites or software using tools designed for that purpose.
- Creating software that replicates an established paper procedure, possibly building in best practices. The fact that a previously manual task has been automated does not by itself make it R&D.
Likely to involve R&D
- Creating new or more efficient algorithms whose improvements depend on previously untried techniques.
- Creating new encryption or security techniques that do not follow established methodologies.
So every project needs to be assessed on it's own merits. Some projects may not fully qualify, but have elements that do, so we work through these to extract the maximum value for your claim. If you'd like some examples that are relative to your industry, please contact us now.