A successful R&D Tax Credit claim depends on identifying all qualifying projects – are you?

There are several stages to preparing and making a successful claim

The first and most important is identifying those projects that qualify.

Crucially you must understand when R&D has taken place – as if you don’t get this right then you wont be able to claim the right amount of qualifying expenditure, it is as simple as that.

However many advisors expect their clients to do this part of the claims process even though they have little or no knowledge or understanding of the rule book.

The identification of R&D for claims is based on the definition set out in the BIS R&D Guidelines issued by Department for Business, Energy & Industrial Strategy.

This complicated rule base, sets out the basic concepts and the boundaries, gives examples, and defines R&D for tax purposes. But the words do not necessarily fit neatly to an actual R&D project in a business context- so they must be interpreted in the light of the facts on the ground.

This is a real skill – it’s where an advisor can be very helpful, correctly identifying the qualifying R&D projects, and their limits.

To help check whether the right amount of R&D is being claimed there are some questions to consider, for example:

You must be mindful of what might you be missing. So, were there any projects that caused difficulty?

Did any experience major cost or time overruns? If the answer’s ‘Yes’, was there a technology which was core to the problem?

If you used knowledgeable technologists and they were unable to find an easy solution, then the work to resolve the issue may well be R&D.

And… have you included work which failed because you could not develop a workable technological solution? Some projects may be aborted because the technological answer could not be found or could not be produced in a cost-effective way. While they may have ceased they may still count as R&D.

The above is just one example of  qualifying projects that are often overlooked due to a basic lack of detailed technical knowledge by the advisor and/or understanding of how the rule book can be applied by the client (we will discuss other areas in future blogs).

To ensure that we don’t overlook any qualifying projects, MSC R&D’s team of technical and financial experts drive the process – we ask our clients what ‘work’ they do first and then we drill down and establish where the qualifying R&D is, leaving no stone unturned in our search.

This way we get the optimum results for our R&D Tax Credit clients.