It seems that HMRC still can’t give away enough R&D tax credits as another campaign to raise awareness of this valuable tax relief has been announced. Here at Ensors we regularly work with companies to determine if they can claim for their research or development, and you might be surprised by the wide range of activities that are covered.
There is one set of rules that defines eligible R&D. No matter what sector the company operates it, these criteria must be met:
The R&D is scientific or technological;
It is novel;
It involves a scientific or technological advance; and
It requires the resolution of scientific or technological uncertainty.
If these conditions are met, the R&D could be in any area and not just the obvious ones of software development, engineering , medicine, electronics, telecommunications etc. It’s true that most of the claims I’ve seen over my 17 years specialising in R&D tax relief have fallen into these sort of areas, but there have between plenty of surprising ones along the way.
Software development was contentious in the early years, but as long as the development goes beyond using tried and tested techniques there is plenty of potential for claims. Moving from virtual reality to the physical world, manufacturing is also a fruitful field for claims. It’s easy to latch onto development of new scientific instruments or medical tools but don’t overlook more traditional manufacturing and heavy engineering. From farm machinery to food processing, if your company is innovating it should be investigating whether it can claim.
With valuable tax savings and generous cash credits for loss makers, don’t overlook R&D tax relief. If your company is developing new products or processes and you think it might meet the four key criteria it is definitely worth investigating further, please contact a member of the Ensors Tax team.