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The Specialist Approach

The meaning of R&D in the context of R&D Tax Credits is not straightforward, and wider than most companies realise. It is not limited to the R&D department.

HMRC defines R&D as work that achieves a scientific or technological advance when scientific or technological uncertainty exists.

This can include:

  • achieving an increase in overall scientific or technological knowledge or capability
  • significantly improving products, processes, materials or services through scientific or technological development.
  • using science or technology to duplicate the effect of an existing product or process in a new or appreciably improved way.

The whole project may not qualify, only the element addressing the technological uncertainty. This is not always easy to identify but can include planning and managerial activities in some instances.

With software R&D, where development is ongoing, identifying the areas of technological uncertainty in projects is critical, as many more routine activities will not qualify.

Qualifying expenditure is not straightforward either, as there is a detailed rule base as to what qualifies and in what circumstances. In reviewing your claim, the HMRC will try to be helpful, but if you claim something to which you are clearly not entitled they may seek penalties.

This complexity is why many companies either don’t claim, or fail to claim all that they are entitled to. Claim documentation may also be technically weak and invite challenge by the HMRC.

‘specialist approach’ on the other hand, uses skilled financial and technical experts, and places the projects and technologies at the centre of the claim. This approach starts with the company’s technical people, talking to them in their own language, identifying all eligible projects and preparing robust claims.

This need not be particularly time consuming because it is a conversation between your technical specialists and ours, so we can quickly grasp the nature of the development and advise where the qualifying R&D occurs.

The expert market knowledge a specialist possesses can help to uncover additional qualifying expenditure. In our experience this can result in claims values being increased by up to 50%.