One of the most common misconceptions within many industries is that if you’re not carrying out scientific research in a laboratory, that businesses simply do not qualify for Research and Development Tax Credits. But how do you know if you’re carrying out R&D within your business?
It all starts with an idea. If you’re attempting to solve problems that are yet to see a solution, there’s a good chance you’re carrying out Research and Development.
R&D starts as soon as you begin working to uncertainties to bring your idea to life. When you’re creating a new idea that’s costly, you’re taking a risk in order to improve the standards of services in your industry, HMRC appreciates this time and wants to reward you for it.
Planning, designing and prototyping is all time covered by the Research and Development Tax Credits initiative – from materials and machinery to wages and utilities.
Spending time manufacturing, building and finalising versions of your ideas in order to make improvements to your industry and your company is also an important part of the R&D process.
Testing is a very important part of any process to create something new and is also a factor in eligibility. No matter how many times you’ve had to go back and test different versions of your product or service, all of this time is covered under the initiative.
R&D ends when the uncertainty does. You can still claim on shelved, failed or old projects. All you have to do is confirm that this work happened within the last 2 financial years and provide proof of why the projects were unsuccessful and attempting to find a solution.
What to look out for:
R&D is most commonly found in companies that have been attempting to fill a gap in the market. HMRC refer to this as ‘resolving scientific or technological uncertainties’ but this covers a much wider range of industries than meets the eye.
If you’re creating new products, processes or services, changing, modifying or making unique adaptations to existing ones, you’re highly likely to be eligible for Research and Development Tax Credits.
As mentioned earlier, if you’ve had a shelved or failed project but If you’re unsure on whether your project is scientifically or technologically possible and working to uncertainties, there’s a good chance that’s R&D too. All you have to do is provide evidence of why the project didn’t work and your efforts to rectify the problem.
How do I find out for sure if I’m eligible?
If you’re still unsure if the above applies to you, You can take our eligibility quiz here. You can also book a no-obligation consultation with one of our Research and Development Tax Specialists. Fill in a contact form here and let us know how we can help. In just a 20-minute phone call, one of our expert team can identify your key claimable areas and if you’re eligible to claim.