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.
And that means making a fresh assessment every year.
With companies already claiming R&D Tax Credits, there is a real danger that they simply continue to claim for projects identified in the last year, rather than looking carefully to identify new areas of work that are at an early stage.
And because R&D relief operates annually companies need to make a fresh assessment each year, including considering the work done by their technology subcontractors and asking whether their work done for them amounts to subcontracted R&D?
Remember, if you engage someone to develop a solution where you know this does not currently exist, you may be subcontracting R&D. Leave no stone unturned in your examination of technology and science.
In recent blogs we have covered difficult or failed projects, adaptations to existing technology packages, legacy systems, implementation, scale-up and support.
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 rule book 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.