When you submit your R&D tax relief claim, you need to show that your project falls within HMRC’s definition of R&D. This applies to applications to both the R&D Tax Credit scheme and the RDEC scheme.
It can be a bit daunting to decipher what this means, so we’ve broken it down into a few straightforward questions to ask yourself. Get over the language barrier and get yourself some investment in your next innovation.
What scientific or technological advance are we making?
You need to take the focus away from the product, process or service that you are going to sell. Just think about the precise aim of your project.
Ask yourself, what new scientific or technological knowledge are we creating? Remember, the ‘advancement’ is not just in terms of your business or industry, but is in reference to the field of science or technology as a whole.
Pay particular attention to the definition of science and note that it does not refer to any social sciences.
This needs to be carefully picked out from all the other work surrounding the development of your innovation and cannot be just a commercial breakthrough.
What is the ‘uncertainty’?
Not every problem you try to solve will fall within the R&D ‘uncertainty’ definition. You have to clearly explain your scientific or technological uncertainty in your R&D tax relief claim. Specifying the uncertainties and their boundaries.
An uncertainty exists when there is no publicly available knowledge that tells you how to resolve your scientific or technological problem. It is also an uncertainty if a competent professional cannot work it out from the current information.
Your project is not based on an uncertainty if:
- Your experts can work out the way forward by simply talking through existing knowledge with their peers.
- Technical issues that are similar to those in previous work and are to operate on similar systems.
- The concept application is only new to your business or field, but exists elsewhere.
Method of resolving your uncertainty
You also have to explain your investigation and analysis in full, as part of your application for R&D tax relief. Not every single detail, but a solid overview that shows what you did, the results and their impact.
You have still ‘done’ R&D if you do not resolve the uncertainty you are researching and if your overall project is a commercial failure.
Context of your research
There are two strands to this element. One is being able to explain that the uncertainty cannot be solved by the existing research in the field. This isn’t as complicated as it sounds. Simply show that other people have tried and failed at the same thing, or demonstrate where something has been achieved but the method is a Trade Secret.
If you are in a very niche field with limited available information, then you will need to use your professional experts to explain why your work is a scientific or technological uncertainty. HMRC may want to see proof that they are competent professionals in their filed. This is evidence is as easy as their current C.V. showing all their relevant qualifications and experience.
You need to be able to explain all of this and be able to locate all the supporting evidence, if it is requested. So it makes sense to gather it all together as part of your R&D tax relief application process.
We can help with your R&D claim
The identification of the scientific or technological uncertainty you are solving is at the core of determining if your project is R&D for tax purposes. Whilst you have your eye on the whole picture, it can be quite tricky to zoom in on these focused details. That’s when having an expert outside eye can really help. We are only interested in the R&D side of your work and quickly discount anything that isn’t relevant to your potential claim.
If you’re already concerned about how much time it’s going to take you to work it all out, give us a quick call on 0330 0539 112. Our initial questions will determine if you are likely to have an R&D tax relief claim to investigate.
If you’re wondering if it’s actually worth it, our average claim is £49k. Imagine what you can do with that. Use our free R&D Tax Credit Calculator to get a personalised estimate of your potential claim.
Our number again? 0330 0539 112.