Are you identifying all qualifying R&D Tax Credit projects? – Tip 4

An optimised R&D tax credit claim relies on identifying those projects that qualify – if you don’t get this right then you won’t be able to claim the right amount of qualifying expenditure.

Sounds straightforward enough, but if it was, we wouldn’t be publishing the 4th in our series of blogs on areas commonly missed by companies or their advisors who don’t possess both the technical knowledge and the understanding of how to interpret the rule book

In recent blogs we covered difficult or failed projects, adaptations to existing technology packages and legacy systems.

Other areas that can often be overlooked include implementation, scale-up and support.

Once a development project was signed off as fit for purpose, did its implementation throw up new technological problems?

Simple bug fixing is unlikely to amount to R&D, but once a development is used at scale, problems that were not anticipated may arise. They may need technological analysis to identify their causes and the development of solutions – this can be R&D.

And, its not just the hands-on technologists that can qualify as part of the R&D effort, so it is important all the necessary support work that assisted your R&D effort is identified.

Considering many advisors expect their clients to identify the qualifying projects when they have little or no knowledge or understanding of the rule book, it is hardly surprising that areas such as the above get missed and valuable R&D tax credit refunds lost

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 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.