HMRC has lengthy conditions around what does and doesn’t qualify for the government’s research and development (R&D) tax credits scheme. The work that qualifies — often embedded in day to day work — continually surprises Easy R&D’s clients. Here are five tell-tale indications that you could be due money from HMRC.
1. You’re a small to medium business in any industry
Contrary to popular belief, R&D isn’t reserved for businesses in science and tech. Absolutely any industry can claim, but you will need to be a limited company subject to corporation tax.
It might be that your company’s main activity and departments differ. For example, a veterinary practice might not be considered a retail company but has a department that develops retail products to sell to pet owners.
2. You’ve improved what already exists
You may be fixing or enhancing an element of a product, process, service, technique, formula, or software item. R&D often starts with identifying a problem, and it doesn’t need to be a world first or rocket science either. Even slight improvements can generate R&D tax credits.
What you’re developing doesn’t need to be for your clients’ use, i.e. selling in the open market. It could be used to improve the way your company operates, i.e. an internal process or system.
3. You’ve created something new
Imagine that a company has developed a new type of software that the market hasn’t seen before. This would be a strong indicator that they’re eligible to claim R&D tax credits.
Now let’s say that the same company has developed software that already exists on the market but had to experiment with different methods and algorithms to achieve the project’s goals. This still creates eligibility.
4. Uncertainty existed, which you tried to overcome or successfully overcame
HMRC specifies that eligible R&D occurs when “a project seeks to achieve an advance in overall knowledge or capability in a field of science or technology through the resolution of scientific or technological uncertainty”. By crafting a compelling R&D narrative for your business, we’ll show HMRC how your R&D projects benefitted your industry as a whole and not just your company.
The good news is that ‘tried’ can still be the operative word and key to a successful R&D claim. HMRC will even pay out on failed projects. It’s our job to present to them how the intention was there.
5. The R&D project couldn’t be easily worked out by a professional in the field
We’ll also need to explain to HMRC how a project couldn’t be easily worked out by, as HMRC puts it, a “competent professional”.
A competent professional is someone in your business who has a successful track record, notable experience and skills, or qualifications in your field of work. For software projects, this may be a developer. In a manufacturing business, it might be an engineer.
Get in touch with us today to find out how R&D tax credits could have the power to transform your business.