Do you qualify for Research and Development Tax Credits?
Work that advances overall knowledge or capability in a field of science or technology, and projects and activities that help resolve scientific or technological uncertainties, may qualify for R&D relief.
R&D has a specific statutory definition for the purposes of R&D tax relief which is not the same as the commercial, engineering or accounting definitions. To qualify the company must be carrying out research and development work in the field of science or technology. The relief is not just for ‘white coat’ scientific research but also for ‘brown coat’ development work in design and engineering that involves overcoming difficult technological problems.
This can include creating new processes, products or services, making appreciable improvements to existing ones and even using science and technology to duplicate existing processes, products and services in a new way. But pure product development (unless seeking an advance in science or technology) in itself does not qualify. Some examples of qualifying activities include software development, engineering design, new construction techniques, bio-energy, cleantech, agri-food and life and health sciences.
Things to consider:
- Does my company have a project?
- Am I seeking an advance in a field of science or technology?
- 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?
- Does the project involve an uncertainty that 'competent professionals' can’t readily resolve and where solutions aren’t common knowledge?
- Remember that the commercial failure of the product or project does not mean that R&D was not present. And if the scientific uncertainties weren’t overcome, that can still mean that the work to address the uncertainties can be R&D.
Judging which projects and activities will qualify for R&D tax relief is usually the area where most people seek help. Experience has shown that companies can benefit from the advice of an expert experienced with the details of the scheme and dealing with queries from HMRC.