How I know whether I am carrying out R&D?

How do do I know whether I’m carrying out R&D?

If you are developing a new or improved product process or solution, your business might be carrying out research and development (R&D). You’ll probably be attempting to resolve an issue where no answer is clear. This can manifest in various ways. And R&D projects can encompass efforts undertaken for a customer as well as your own company.

The government’s R&D definition is intentionally wide. Regardless of scale or industry, if your business is taking a risk by attempting to ‘resolve scientific/technological unknowns’ then you may be performing qualifying activity. This could include:

Developing novel items, procedures, or solutions.

Modifying or altering an current item, procedure, or service to make it better.

This means that if you’re uncertain your project is scientifically or technologically possible or you’re unsure how to accomplish it practically, you might be resolving uncertainties and therefore be eligible for R&D tax relief.

Where does R&D begin and finish?

R&D work commences when a project seeks an improvement in science/technology and ends when the project’s uncertain elements have been overcome. Any user tests or marketing efforts after resolving the project’s uncertainties will not be R&D.

How can I tell if my initiatives are eligible for R&D tax relief?

For a initiative to qualify as R&D, you need to have set out to achieve an advance. That advance must be in the area of science or technology, not just in your company’s own expertise. The initiative can still be R&D if the advance has already been achieved but the specifics are not publicly known because for example they’re a trade secret.

It’s important to note that R&D is unavoidably not always fruitful. If your initiative is ultimately unfruitful but aimed for a solution that was unclear initially, it could still be R&D.

What kind of initiatives do not are not eligible for R&D tax credits?

Generally, standard replication of current items, processes, substances, devices, or services will not usually qualify as R&D. Work to enhance the appearance of a procedure, material, equipment, product, or service will not itself be R&D. However, work to create certain cosmetic or aesthetic effects through the use of tech can still qualify.

At hamilton wood And company Wood & Company, our team comprises not just certified tax consultants but also industry experts, attorneys, former HMRC inspectors and even a rocket scientist!

We use a continually-evolving process to create R&D tax relief applications that meet HMRC’s rigorous criteria – and maximize benefits for your company. If you’re uncertain whether your efforts qualifies, we can assist you.