01Aug
Research and Development (R&D) Tax Relief offers a powerful incentive for businesses to invest in innovation. However, navigating the complexities of R&D claims can be challenging. With error and fraud being a major issue it is clear that many companies are receiving incorrect advise about their eligibility.
In this article, we will explore what qualifies for R&D tax relief. A project must meet all of the below to qualify for R&D tax relief.
Seeking to achieve an advance in science or technology:
This could be through creating new or improving processes, products, or services. It encompasses a wide range of fields, including engineering, software development, biotechnology, and more.
It is important to note that the advance sought MUST improve upon industry knowledge and/or capabilities NOT just the Companies own knowledge. A Company must be going beyond the industry baseline and not just tweaking or making none trivial improvements.
Overcoming Technological Uncertainty:
R&D Tax Relief is specifically designed to support projects that seek to overcome technological uncertainties. If your project involves addressing unknowns or encountering obstacles that require experimentation and analysis, it likely qualifies for R&D tax relief.
The outcome must be uncertain from a technical perspective as opposed to a logistical or routine challenge.
Not Deducible by a Competent Professional:
For a project to qualify it needs to involve Competent Professionals in the field that the advance is being sought. These CPs can be qualified through experience and/or education.
The expert in the field needs to be fully convergent with the baseline and unable to make a deduction or conclusion about how to achieve the outcome. The CP must be unable to follow routine methods due to the project's complexity or lack of evidence.
It is important to remember that even if the advance in science or technology sought by a project is not achieved or not fully realised, R&D may have still taken place.
R&D Tax Relief offers significant opportunities for businesses to recoup a portion of their investment in innovation. By understanding the activities that qualify for relief and harnessing the expertise of an R&D tax adviser, you can optimise your claim and increase the likelihood of a successful outcome.
Advisers bring invaluable knowledge, documentation skills, time savings, and compliance support to the table, allowing you to focus on your R&D projects while maximising the benefits of R&D Tax Relief.
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