Identifying qualifying R&D in the field of software development

This post is part of our Entrepreneurial team’s regular series of blogs.

The number of Research and Development (R&D) Tax Relief claims made in the computer science and information technology industries has rapidly increased in recent years. With that, HMRC have invested time and resources into educating their inspectors to identify qualifying and non-qualifying activities within software development claims. This is because, although the Business Energy and Industrial Strategy (BEIS) guidelines (that define the qualifying criteria for R&D tax relief) apply equally to all fields of science and technology, HMRC recognised that there had been difficulties in the past in applying them to some software projects and therefore determining whether they were eligible for relief.

As well as training their staff internally, HMRC published guidance for claimant companies to assist them when preparing claims, to accurately capture only qualifying activities and costs. A summary of the key points are as follows:

Advancing knowledge or capability in the entire field

The advance or appreciable improvement being sought needs to advance the knowledge or capability across the whole field of computer sciences and information technology, rather than the company’s own knowledge or capability. Whether the advance applies to the entire industry or only the company can sometimes be hard to ascertain in a fast-moving industry such as computer sciences. This should be considered by a competent professional working in the field and by reference to publicly available information.

Focus on the underlying technology

The technological advance being sought should focus on the underlying technology being developed i.e. the algorithms and methodology, rather than the commercial output of the software. This is because software can be developed to provide functionality that is novel, however the methodology applied to achieve this is routine, and therefore non-qualifying.

How to identify technological uncertainties

As with all other industries, the claimant company must also face technological uncertainties when seeking to achieve the advance. Technological uncertainties arise when how to achieve the aim it is not readily deductible by a competent professional or by applying existing methodology. Examples of technological uncertainties that HMRC provide include:

  • Developing new or improved data architectures that cannot be achieved with readily deducible solutions, e.g. pushing beyond the boundaries of existing readily available database engines.
  • Extending software frameworks beyond their original design, where knowledge how to extend these was not available or readily deducible at the time.
  • System uncertainty when working with multiple components, resulting from the complexity of the entire system, rather than how the individual components behave, i.e. components cannot be assembled into an established pattern.

Separate the R&D project from the commercial project

R&D projects must be carefully defined within the larger commercial project. Any activities that do not attempt to overcome technological uncertainties do not qualify for relief and fall out-with the project for tax relief purposes. Specific activities that HMRC state do not qualify for R&D tax relief include:

  • Planning activities associated with non-R&D elements of the project such as financial, marketing and legal aspects.
  • Development of routine aspects of the software, such as the user interface, rather than the underlying technology.
  • Testing only qualifies if the purpose of the testing work is to feed back into the development, not to validate that it works properly once the technological uncertainties have been resolved.
  • Deployment or release activities that transfer software to production systems generally happen after the uncertainty is resolved and, as such, do not qualify.
  • Maintenance activities or minor fault fixing where no technological uncertainties arise do not qualify.

HMRC are increasing resources in their R&D team and diverting and re-training staff from other areas to enable them to process and accurately analyse the eligibility of claims. Therefore, it is important that companies consider and adhere to the above guidance when making software development claims.

Here at C+T we have extensive experience in preparing R&D claims in the computer sciences sector and our report to support a claim is designed to give HMRC all of the information it requires to assess its eligibility and prevent an enquiry being opened to request more details.

Our team of experts are on hand to help you through the claim process, give you peace of mind that all relevant factors have been considered, and significantly reduce the risk of an enquiry. If you have any questions, get in touch and we can advise.

If you would like further advice regarding the availability of Research & Development Tax Relief relief, please get in touch with us.

How older companies can qualify for EIS

This post is part of our Entrepreneurial team’s regular series of blogs.

This week I’m looking at the ways that companies can qualify for EIS despite being outside of the ‘initial investing period’. There are a few ways to do this, but there are also a number of areas to watch out for where mistakes that prevent EIS qualification can be made.

What is the initial investing period?

Broadly, the initial investing period is the seven years following a company’s first commercial sale. (Knowledge Intensive Companies (“KICs”) have more generous rules which allow them a longer initial investing period and several other relaxations: for more information see the blog my colleague Ryan wrote.)

The first commercial sale can sometimes be tricky to pin down. It’s defined in the European Commission’s Guidelines on State Aid as “the first sale by an undertaking on a product or service market, excluding limited sales to test the market”. The key point to bear in mind is the “limited sales to test the market” point, as the first time a company makes a sale (for example of a prototype) does not necessarily mean that the seven year clock to receive EIS will immediately start ticking after this.

Receiving EIS investment after the initial investing period

There are three conditions that allow companies to access EIS investments after the initial investing period – conditions A, B and C. Your company only has to meet one of these.

Condition A – past S/EIS received

Funding under condition A is available if a company has already received past S/EIS investment before the end of the initial investing period and:

  • the new EIS funding is used for the same qualifying business activities as the first S/EIS funding was; and
  • the company’s business plan at the time of the initial funding foresaw the need for follow-on funding.

It is the second condition that is a frequent issue. Where companies suspect that they will require further funding, this should always be specified in the business plan – even if the quantum of future funding required is not specifically known at that time.

(NB: where the initial S/EIS was received before 18 November 2015, the business plan does not have to show the need for follow-on funding.)

Condition B – new product or geographic market

Condition B allows companies to receive EIS funding where:

  • the amount of the EIS funding, together with any other EIS, SEIS, VCT, SITR or other Notified State Aid funding (e.g. Innovate UK or SMART Grant) within a 30-day period, is at least 50% of the company’s average annual turnover (calculated by averaging the company’s turnover for the past five years); and
  • the money raised by the EIS funding must be used for entering a new product market or geographic market).

The first test is often overlooked as companies focus on the second. It is important to note that non-EIS investment does not qualify. Scottish Investment Bank match equity funding, for example, is not a Notified State Aid and does not qualify.

As the EIS funding needs to be spent entirely on the new product or geographic activity (and companies need to show how the money will be spent), companies should not try to raise more money than they need for the new activity, as spending money on other business activities would cause them to fail the condition. On the other hand, the first part of the test may mean that companies need to raise a large investment if they have succeeded in generating significant turnover over the past few years – so it is important that companies carefully consider exactly how much EIS funding they require.

To be considered to be entering a new product market, a company must show that it is targeting a new customer base, and not just releasing a new product which its existing customers would use.

In terms of entering a new geographic market, companies need to show that the conditions of competition are appreciably different in this new area. Expanding to a new city is not likely to meet this test, but expanding to a new continent likely is.

The key point for a company to prove with relation to condition B is that it would not be possible to use its previous track record to assess the potential of success for its new activity. Companies should aim to demonstrate to HMRC that they are effectively setting up a new business, not just slowly expanding.

Condition C – past EIS funding under condition B

Condition C is, luckily, a lot simpler, and is simply for companies that have raised EIS funding under condition B and now wish to raise follow-on funding. The rules are the same as for condition A – remember the importance of specifying the need for follow-on funding in the business plan!

In Summary

Securing EIS investment after the initial investing period of 7 years may look like a daunting process, so if you think that this might apply to your company it’s best to start thinking about it sooner rather than later. That way, parts of the tests are less likely to catch you out in the future.

If you would like further advice regarding the availability of EIS relief, please get in touch with us.

EIS: alive and KICing for companies that innovate

This post is part of our Entrepreneurial team’s regular series of blogs.

There have been many tweaks made to the Enterprise Investment Scheme (“EIS”) since its inception in 1993. Mostly, these have toughened qualifying conditions. However, seeking to advance its use in certain companies, HMRC introduced significant relaxation of several EIS limits. This relaxation of the rules was only made available to Knowledge-Intensive Companies (“KICs”), which are the types of companies in which the majority of Scottish EIS investment funds are placed. This blog will explore the benefits and qualifying requirements of being a KIC.

The benefits of being a KIC

  • A company can raise £10m EIS investment per year and £20m EIS investment over the company’s lifetime (in comparison to £5m and £12m limits, respectively, for non-KICs).
    In addition, investors can claim tax relief on up to £2m worth of EIS investment, if at least £1m of this is invested in KICs.
  • A company can receive its first EIS investment up to 10 years from the end of the accounting period in which its turnover first exceeded £200,000 (the time limit being only 7 years from first commercial sale for non-KICs).
  • A company may have a maximum of 500 full-time employees (with the maximum for non-KICs being limited to 250).

How to qualify as a KIC

To qualify as a KIC, a company must meet two conditions: the operating costs condition and either the innovation condition or the skilled employee test:

Operating costs condition

  • The company must have spent:
    • at least 15% of its operating costs on research and development or innovation in one or more of the previous three years (or in the three years following investment for a new company); OR
    • at least 10% of its operating costs on research and development or innovation in each of the previous three years (or in the three years following investment for a new company).

Innovation condition

  • the company must be carrying out work to create intellectual property and expect the majority of its income to come from this within 10 years.

Skilled employee test

  • the company must have 20% or more of its employees carrying out research for at least 3 years from the date of investment, and these employees must be in a role that requires a relevant Master’s degree or higher.

In Summary

For most technology-based or R&D companies, the KIC conditions will be relatively easy to meet. However, HMRC will only provide pre-investment assurance of KIC status through its Advance Assurance regime if a company actually requires this status in order for the investment that it receives to be EIS qualifying i.e. to get within one of the higher limits that are permitted for KICs. If the limit in question is the investor one (i.e. if any investors are relying on the company being a KIC for their own personal EIS annual investment limit), the company must provide HMRC with the investor’s details and notify them of the investor’s requirement for their investment to be in a KIC.

These rules provide hope for companies that might, due to their age, have disregarded the possibility of receiving EIS investment. If you are interested in exploring the availability of EIS, please get in touch and we can discuss further.

EIS: case update regarding dividend rights

This post is part of our Entrepreneurial team’s regular series of blogs.

To be (a preference) or not to be (a preference): that is the question. More accurately, that was the question before the Upper Tier Tribunal (UTT) last week regarding Foojit, a company whose EIS compliance statement was rejected by HMRC.

The court had to decide whether to uphold a decision made by the First Tier Tribunal (FTT) in 2019 that the right to receive 44% of dividends payable up to a limit, presumably aligned to investment delta, constituted “a preferential right to dividends” and therefore agree with HMRC. It did.

The case was intricate. Essentially, the UTT agreed with the premise of the FTT’s findings that there needed to be some deliberate action or decision on the part of the company to enable or initiate the dividend declaration. This, coupled with the clear position – accepted by both sides – that the quantum of the dividend was a preference, meant that the shares requirement for EIS compliance was not met. Interestingly, the UTT corrected the focus of all parties (including the FTT without so naming it) that it is not enough to consider the updated Articles. Rather, where there are model Articles in place, it is incumbent on the reader to consider both documents.

There is a disparity in the EIS legislation regarding preferences: the test looks at both assets and dividends and, whilst prescriptive regarding the latter, leaves the former undefined. This, coupled with HMRC’s long established, if counter-intuitive, position that rights to assets are only “preferential” if they enable one share class to receive before another share class irrespective of quantum, means that it is commonplace to award 99.99% of assets up to a hurdle to the EIS share class, so long as dividends are equal between all share classes. Note, all share classes. Users of deferred and growth share classes beware.

The UTT did provide some offer some hints at what it would have found acceptable, such as had the dividends been predetermined to be payable and then crystallise as a debt if unpaid, but I think that it would be a brave company that relies on that as offering a binding precedent.

In reality, the overwhelming majority of EIS companies will never get to be dividend paying whilst owned by the investors; successful companies will create IP and resultant large negative reserves before turning the corner and being acquired, or the less successful will fail. As such, my advice would be to lean toward pragmatism; leave dividends well alone. Don’t try to be too clever over rights that are not likely to be effective in practice. Focus on asset rights, which will make a difference to the investors rather than risk suffering the slings and arrows of outrageous fortune.

Company Share Option Plans: the alternative to EMI?

This post is part of our Entrepreneurial team’s regular series of blogs.

Over the past few months, as companies have been seeking alternative methods of employee incentivisation with less impact on short-term cashflow, we have seen a considerable increase in requests for share schemes and incentives.

The obvious port of call is the Enterprise Management Incentive scheme, being the most tax advantageous available. However, certain trading activities do not qualify for EMI, and employees must meet a working time requirement to qualify, so we have been increasingly looking to other tax-advantaged ways of providing share incentives.

The Company Share Option Plan has become more prominent as an alternative – particularly where a low valuation can be agreed with HMRC, as there is a low cap on the value of shares an employee can be granted under a CSOP at £30,000. (As mentioned by my colleague Thomas in his recent blog, this happens to be a good time to be agreeing low valuations with HMRC due to the impact of the pandemic on many small companies.)

A CSOP is fairly inexpensive to implement, has no tax implications for the recipient on grant and can result in only a 10% or 20% Capital Gains tax charge on sale of the acquired shares, if the option has been held for at least 3 years. Additionally, the company can avail itself of a corporation tax deduction on exercise, equal to the difference between the market value at exercise and the price paid by the employee.

The common understanding is that share schemes are used in high-growth companies or large established businesses seeking to incentivise senior management as part of a remuneration package. The CSOP, however, provides an opportunity for many small businesses to give employees an additional incentive to push growth in the company leading to a sale or acquire a shareholding to provide a dividend stream or starting point for a management buy-out.

It may not be talked about as often, but the CSOP provides obvious benefits to companies and individuals who would fall foul of the EMI qualifying criteria. The tax implications are certainly more advantageous than simply issuing shares to employees, as discussed by my colleague Sarah recently.

Our team are experts in advising companies on the best share scheme and how to structure to ensure the maximum benefit for the company and employees. In the case of a CSOP, a valuation must be agreed with HMRC in advance of granting options. Talk to us to find out more about how this could benefit your business.

Brexit is done, so roll on amendments to EIS

This post is part of our Entrepreneurial team’s regular series of blogs.

Many within the investment industry have been frustrated at the restrictions placed on SEIS and EIS by virtue of compliance with EU legislation.

Whatever your political persuasion – this article is deliberately apolitical – it is clear that Brexit offers an opportunity for HM Treasury to make amendments to the SEIS and EIS schemes, without breaching EU law. It would appear that with this in mind, the EIS Association (EISA) has written to the Chancellor and laid out proposals to improve these schemes.

SEIS is de minimis state aid, meaning that there were limits around the quantum of investment that could be received and also that EIS is a Notified State Aid, providing the EU with influence over its rules and application.

Such influence was most notably exercised in 2015 when HM Treasury instigated changes to EIS because it needed EU reapproval of the scheme. These changes included a termination date for the EIS scheme; a maximum age of the company requirement and restrictions on which investors qualified, how money was to be spent, and which companies qualified; and the promotion of “Knowledge Intensive Companies”. With the exception of the last point, these changes were not welcomed by most and fundamentally changed the investment landscape. In my opinion, for the worse.

The EISA’s letter, timeously issued in advance of the March Budget, sets out its recommendations for changes to these schemes. I applaud their actions, having written several articles in the past stating my desire for positive and progressive post-Brexit changes to the EIS scheme. Their recommendations, together with my own thoughts, are listed below:

Immediate change – i.e. from 3 March 2020

1. Increase the maximum level of SEIS investment from £150,000 to £250,000.

The majority of start-up companies we see seeking investment look for around £250,000 in their first investment round. As the rules currently stand, investors need to seek the first £150,000 to be SEIS and the remaining £100,000 to be EIS. The effect of which, to be compliant with the SEIS rules, is that the investment must be tranched over two days. This added complexity requires more detailed and correspondingly expensive investment agreements to be drawn up, as a result of which I have seen investments falling through.

Autumn Budget changes – likely to be around mid-November

2. Replace the Age Restriction with a more appropriate threshold

5 years on, the maximum age restriction is still the EIS change that prompts the most questions to our @LINC Scotland EIS Helpdesk from investors. In a nutshell, older companies do not qualify unless

  • i) they have previously taken EIS investment and are seeking to further fund that activity; or
  • ii) are trying to do something very different and are raising a significant sum to finance it.

I see half a dozen good companies every year which need investment and cannot get through these rules. They are left out to dry. The EISA do not advocate simply throwing open the doors to all companies, but replacing this (unfair) test with a (fairer) test that reflects the size, not the age, of the business.

3. Ministerial assurances that EIS will continue beyond 2025

If we are to succeed as a country, investment in innovation is critically important. Banks simply will not lend to most early stage businesses, so these businesses need to turn to investors to get going, fund their growth and fund their expansion. The EIS scheme is a significant job creator, with 4 new jobs created for each £1m invested according to the EISA. When the 10-year scheme limit was enacted, much consternation was expressed. We are now over half way through that window and need to have assurances that the scheme will continue.

4. Reducing the admin burden

We live in a digital age in which all PAYE information is instantly known to HMRC; all VAT information is reported instantly to HMRC; and all accounts and tax returns will soon be instantly reported to HMRC.

By comparison, EIS is reported through a combination of a manually-completed document that prompts HMRC to issue a PDF certificate, authorising the company to prepare and issue forms to the investors who then can manually complete it and submit in the tax returns or directly to HMRC. This is archaic. It should be possible for the post-EIS investment form to be digitally uploaded and, once accepted by HMRC, each investor’s tax recorded updated to record the investment.

Final thoughts

In addition to the above, EISA also recommends HM Treasury investigates how money held in pension funds can be used to fund EIS and SEIS qualifying companies and how to raise the profiles of EIS and SEIS investments.

The EISA letter is first class. It is a well researched, well presented and well thought-through request for support. Support that the government can provide without massive cost to the exchequer, and that will enable the economy to grow.

Finishing university and returning to C+T: all from my bedroom

In this blog, Entrepreneurial Tax Trainee Sarah Gibbens talks through the last months of finishing university and starting her new job at Chiene + Tait – all through lock down.

 

Many remember their final year of university fondly; sharing the last few months with your university friends before you end up miles apart, the post-exam celebrations, and travelling the world before you start work with the prospect of being a real adult. Sadly, for me, and all other 2020 graduates, this was not the case. I didn’t realise that my last, physical day at university was in fact my last. Coronavirus was certainly around at that time, but the world was yet to descend into full lock down. And so, as we broke up for Easter break I assured my friends that I would be back in town come a week or two, and made plans for our return. We didn’t realise quite how much the world was about to change.

It was almost like a dystopian dream when the PM appeared on our television screens to announce lock down, I’m sure many of you felt the same. Universities subsequently began to scramble to get us all online so that we could finish our degrees. Thankfully, the end of my degree wasn’t as stressful as it was for others. Unlike most other people, I’m still not sick of my dissertation topic (the benefits of being a modern history student mean that you get to choose topics such as the Kennedy brothers’ involvement in the plots to assassinate Castro) and my final economics exam was replaced by an essay that was shockingly also very interesting.

However, the end to my degree was still anticlimactic. Clicking submit on ‘Turn-it-in’ doesn’t quite have the same satisfaction levels as handing in a bound copy of your dissertation or leaving the exam hall for the last time and finding your friends waiting to soak you with water, as is university tradition at St. Andrews. For the months I had before starting at Chiene + Tait, I had this strange feeling that I hadn’t actually finished at university.

Coming back to C+T was something I had been looking forward to ever since receiving my job offer, after my internship last summer. Everyone in the team had been so friendly and the work in Entrepreneurial Tax had been incredibly interesting. The knowledge that I already got on well with the team, and enjoyed the work made my last year at university somewhat more relaxing, as I didn’t face the pressure my peers were under, not just to find a job but to find one that I liked as well.

As the world pandemic developed and the weeks turned into months, my start date for C+T began to quickly approach but lock down remained firmly in place. This made me somewhat apprehensive about starting. Many of my friends had their jobs postponed until next year, but thankfully C+T emailed to let me know that I’d be starting from home remotely. This again left me with many questions, however, as I had no idea what it would be like to start a new job from my bedroom.

However, beginning my new job at the firm has helped to make it feel like my life is moving forward once again. Although it has only been a few days, the remote start to my work has been an easy and enjoyable process.  Everyone at C+T has been extremely helpful and welcoming, and I already feel part of the team. I’ll admit it is odd working from home, especially when my flatmates aren’t in full-time work, meaning that I seem to be living in a  different time zone to them when it comes to our waking hours, but having my morning commute reduced to from one side of the room to the other is definitely something that I could get used to!

As I continue my career at C+T, I’m looking forward to developing my knowledge of Entrepreneurial Tax and working towards my tax qualifications. As much as I am so far enjoying working from home, I am also excited for when the world starts to return to some semblance of normality and I can meet my colleagues properly, rather than through a grainy camera screen. It’s uncertain when that will be possible, however, so for the moment we’ll have to wait until we can see each other in HD once again.

Sarah Gibbens, Chiene + Tait Entrepreneurial Tax Trainee

 

How (a background in) sport has helped me settle in at C+T

Playing sports has always played a huge role in my life, filling the majority of free time I have. I feel the experiences I have encountered through playing sport have allowed me to begin developing the skills necessary to be successful in my professional career. However, in order to develop my skills further, I needed real exposure to a professional environment which is where C+T comes in.

Going back to this time last year, summer 2018, I was about to take on one of the most exciting challenges, one that on paper seems very different to the challenge here at C+T, but surprisingly had many similarities.

Setting off on my own on the 18,000km+ journey to Christchurch, New Zealand to play rugby with one of the country’s most prestigious teams is something I had previously only dreamed of. The complete unknown loomed from my first step on NZ soil. Everything was new to me; the people, the culture and the environment in general were a huge change – the term ‘thrown into the deep end’ springs to mind!

You might be wondering what this has to do with an Entrepreneurial Tax Internship in Edinburgh? The feelings I faced on day 1 here at C+T were similar, albeit I wasn’t throwing myself around the office (most of the time). Entering a new, professional environment comes with the same feelings of uncertainty, which I have come to realise must be cherished and taken full advantage of. The opportunity to do something new and different allows you to develop and grow as an individual, both in the office, on the field and in life generally.

After somewhat settling into life here as an intern I have been exposed to a vast variety of taxes, tax reliefs and tax procedures from CGT to EMIs to completing corporation tax provisions. I cannot speak highly enough of the patience and understanding I have had from everyone thus far; I assume that an intern asking questions every five minutes can be a bit irritating (to say the least!), but if you don’t ask, how do you ever learn?

I have thoroughly enjoyed being exposed to the R&D team at C+T, learning about legislation regarding tax relief has allowed me to understand the substantial impact that correct R&D advice can have on a business. Listening in on calls and seeing first-hand the interactions between clients showcased the friendly, but professional manner that C+T hold themselves to. Working with the R&D department, I got the chance to learn and understand the new and unique technological advancements each client makes, something I found to be a fascinating!

One final thing that stands out for me about C+T are the people. They say the people make the firm and I believe that to be true here at C+T. Like the Kiwis, I received a warm welcome, they really made me feel like part of the team from day 1, showing me that C+T put an emphasis on developing relationships both internally and externally.

Overall, I am looking forward to furthering my knowledge and developing my skills in my final two weeks at C+T and I am excited for any future challenges that may arise both in the office and the field.

Are you missing out on Research & Development Tax Relief?

In this blog, David in the Chiene + Tait Entrepreneurial Tax Team highlights Research & Development Tax Relief and asks – are you missing out?

Scottish companies received over £165 million in Research & Development (R&D) tax credits last year. Yet a recent HMRC study showed a number of industries are still failing to claim R&D tax relief, when they could be eligible. I’ve produced an infographic on which sectors can claim the relief but traditionally don’t here.

There is a misconception that the relief is only available for technology start-ups or scientists in lab coats. This is just simply not the case, so is your company missing out?

What is Research & Development Tax Relief?

Research & Development tax relief is one of the most generous corporation tax relief currently available. The relief is a HMRC incentive designed to encourage innovation and increase spending on R&D activities, however, many companies incorrectly believe that they don’t qualify.

The relief can be extremely beneficial. Under the scheme companies can receive a tax credit or enhanced deductions to reduce their tax bill, that means £100k worth of qualifying expenditure can get you either:

  • £230k worth of losses (worth £44k @ 19% tax rate) to utilise against future profits or
  • £33.35k tax credit (cash in hand)

Essentially this means that if your company has tax to pay, you will pay less. If not, the Company will receive a tax credit.

What is R&D?

In the eyes of HMRC, R&D is a project that seeks an advance in science or technology through the resolution of scientific or technological uncertainties.

An advance in science or technology is an advance in the overall knowledge or capability in a field of science or technology (not a company’s own state of knowledge or capability alone). This can also include a project that seeks to make an appreciable improvement to an existing process. In layman’s terms, if you are seeking to create something new or improve upon an existing process, it will likely qualify for the relief.

Even if the advance in science or technology sought by the project is not achieved, R&D still takes place. This means that costs relating to aborting a project could also qualify for R&D.

Available for all – not just people in lab coats

With such a broad definition, thousands of companies are missing out. Below are just a few examples of projects that have qualified for relief in the last year:

  • Creating a new recipe for a soft drink to adhere to the new sugar content regulations
  • Improving upon an existing manufacturing process
  • Creating a bespoke multi-functional piece of furniture
  • Building a software infrastructure that’s more efficient than its competitors
  • Developing an in-house Customer Relationship Management system

None of these are ’traditional’ R&D projects but all qualified for R&D tax relief. Some tips to keep in mind when considering if your project will qualify is to ask yourself the following:

  • Has a technological advancement been made?
  • Is the company working on something that has never before been attempted?
  • Has the company tried to improve their existing products through technological change?
  • Has the company found a more efficient way to work?

If your answer is yes to any of these then there will likely be scope for an R&D claim. Your next step should be to speak to an R&D specialist to determine the size of the claim and to ensure that you don’t suffer any pitfalls!

Chiene + Tait has a specialist R&D team that can help identify what can and cannot qualify for relief. In the past 24 months, we have successfully submitted over 80 R&D tax credit claims resulting in over £2.5 million being received by our clients, achieving a 100% success rate. If you would like to watch a webinar outlining these points, please visit the Chiene + Tait You Tube channel here.

If you would like a no obligation meeting to discuss R&D Tax Relief and whether you can apply, please contact me at david.philp@chiene.co.uk or call 0131 558 5800. Alternatively, I’ll be at the Investing Women Ambition & Growth Conference on 8th March and happy to chat further.

Kirsty Paton in our Entrepreneurial Tax Team has also written a blog about Understanding Investment. To read this article click here.