Few businesses realise that you don’t actually have to be a high-tech design firm or a leading software house to obtain R&D Relief. As a brief illustration, we have completed claims for companies of all sizes operating in industries such as manufacturing, camping, leather and leisure, to name but a few.
In fact, any organisation liable for Corporation Tax may be eligible for tax relief through R&D where the activities they have undertaken seek to advance overall knowledge and understanding within the industry in which they operate. It is important to note that this therefore means a project is not actually required to be successful in order for a R&D claim to be accepted.
A project should, however, attempt to resolve an existing uncertainty as to whether something is “scientifically possible or technologically feasible” in order to qualify for relief, but it is a common misconception that this solely involves the creation of a new, highly-sophisticated product: R&D Relief is also, in fact, given for improvements that are made to an existing product or even a process that is utilised by your industry.
Although this could be as large as revolutionising an entire manufacturing procedure to enable the same item to be produced in a more efficient manner, it can also be as small as designing an unconventional new safety mechanism to be incorporated into a product that is already widely available.
Another misunderstanding about R&D Relief is the concept of investment. Many organisations consider that just because they have not invested large quantities of capital into a project they are not eligible to make a claim, when in reality they are. This is because HMRC also consider revenue expenditure (such as consumable materials, heating, lighting and software costs) and an appropriate proportion of employee labour costs (including salaries and both company National Insurance and Pension contributions) when considering the total amount that can be claimed, but also do not require a minimum amount to be spent before a project can be considered for tax relief.