For the R&D tax credits to be available, in addition to meeting the SME criteria, your business will also need to:
FIRSTLY - Be undertaking qualifying R&D activities.
SECONDLY - Have spent on R&D activities.
For the purposes of the scheme, R&D is a project which seeks to achieve an advance in overall knowledge or capability in science or technology through the resolution of scientific or technological uncertainty.
Innovation can apply to any sector where technical progress can be shown. This could involve the development of anything from software to business processes.
The burden is on your company to evidence ‘innovation’. However, the rules do not require you to provide evidence you have been successful in your R&D or to divulge how you are carrying out your activity. What is sought is the attempt at innovation against technical uncertainty.
Innovation, of course, means different things to different sectors. There is no bright-line test as to what innovation is.
Experience with the R&D tax credit scheme and what is likely to be accepted as innovation will be invaluable when assessing your eligibility under the scheme.
It becomes a matter of understanding HMRC’s stance on what is classed as ‘innovation’, and effectively documenting and presenting evidence to support your claim.
For more information on Research and Development tax relief, click here.
At ETC Tax we are experienced in handling client’s claims from start to finish, including identifying if the company is undertaking R&D activities. Please get in touch if you have any queries.
Research and Development tax relief is a UK government initiative that offers significant corporation tax savings on eligible expenditures. If your company is developing new products or improving its products or processes in some way, then it may qualify for R&D tax credits from HMRC.
