How to better forecast your R&D tax claim

Diagnostax Blog 2: R&D Better Forecasting

How to better forecast your R&D tax claim

When R&D tax relief first fell onto your radar, you were no doubt blown away by the generous benefit, of up to £33 back for every £100 you invest in R&D. But the truth is – as you may have already experienced – for R&D projects, the amount you can claim ranges anywhere from 0 to 33%, depending on several factors.

As a business that is investing in research and development activity, and making R&D tax relief claims, it’s important for you to have as much certainty over your R&D claim, as early as possible, even as early as the planning phase. But why?

Well, an R&D claim only gets you money back for costs you have already incurred. This means you’re not going to get any benefit from the investment until at least a year or so down the line, or if you’ve really got your act together, several months.

Getting a better understanding of what will qualify before the project, allows for a more accurate estimate of the true cost of the investment, at the outset. At the front of the project this enables more accurate budgeting for the time and resource invested. At the back of the project when the claim comes to realisation, this enables more accurate cashflow forecasting so you can plan for any potential future investment.


SO, WHAT IS THE TRUE COST OF MY R&D??

To get a better understanding of the true cost of your R&D investment, there are three big questions you need to be able to answer BEFORE you kickstartyour next R&D project:

  1. Is it even an R&D project?
  2. What qualifying activity can I claim for?
  3. What R&D rate should be applied to the qualifying activity?

Let’s take a look at each of these questions in a little more detail….

R&D investment
  1. Is it even an R&D project?

You’ve got to get past this hurdle first and believe us when we say, we still work with businesses that misidentify R&D projects all the time. To err on the side of caution it’s best to keep a record of all projects that you think will qualify and check it out with your R&D adviser if you are unsure.

So, how do you know if your project is eligible?

Well, to be eligible, an R&D Project must be:

Making a considerable improvement to existing technology. This doesn’t always mean it needs to be ground-breaking work. If you are working to overcome technical uncertainties in order make your products, services or processes, faster, less expensive, or better in some way, the project may be eligible for R&D tax relief.

AND


Overcoming technological challenges, where the solution is not readily apparent to a qualified or experienced professional in their field of technology.

If it’s an R&D project, then it goes on the list, and you need to determine what costs you’ll be able to claim.

R&D project

2. What qualifying activity can I claim costs for?

To qualify, R&D activity must fall into one of the below categories:

  • Staff costs
    You can include the salaries, pensions and NIC of staff who are directly involved in the R&D project.
  • Reimbursed expenses paid to employees or directors on R&D travel
    You can include reimbursed expenses claimed by employees or directors on travel related to the R&D project.
  • Outsourced subcontractors or freelancers
    You can include 65% of the costs paid for “unconnected” subcontractors (under the SME R&D scheme).
  • Materials for prototype builds
    You can include the cost of the materials required for designing and constructing a prototype which will not be sold.
  • Ancillaries – utilities, software licences
    You can include an appropriate proportion of utilities and software costs used in your R&D projects.

Unfortunately it’s not always black and white, and knowing whether the activity ACTUALLY fits into a qualifying category can throw up some tricky red herrings.

software costs used in your R&D projects

Here’s a couple to keep an eye out for:

Software and Hosting….

Now this one’s a little cheeky. Although software licences can be claimed, hosting costs on their own do not fit into a qualifying category of R&D. This can be frustrating as businesses often incur large hosting costs used purely for R&D, so feel they should be included…but currently they aren’t.

Having said that, hosting can often include a lot of services, and depending on how the company uses them, there is the possibility they could be eligible under the software licence header. As you can see, this area is complex and your R&D provider would need to look into this for you, to help apportion the amount linked to a qualifying category.

Storage, telecom and data costs are just out of the game, they do not qualify.

Staff time…

Time allocation for employees involved in R&D projects will often be one of your biggest costs, and so it is vital to apportion everyone’s time as accurately as possible to get better certainty over your R&D claim. Record time spent by those directors, employees, qualified staff working on the R&D project.

It’s also important to make sure you are including staff costs for all indirect qualifying activity. This includes roles of support staff where they are engaged in activities such as finance and HR, that indirectly support an R&D project

3. What R&D rate should be applied to the qualifying activity?

So now we know the project is eligible, and the different qualifying categories the activity must slot into (including the nuances), we want to know the R&D rate that can be applied to the activities.

There are three main factors that could impact the amount of the costs incurred that you can actually claim back:

R&D SME Scheme vs. RDEC Scheme

Depending on which scheme you are claiming under, this can significantly impact the rate you can claim.

  • RDEC SCHEME: Following the 2021 Budget, RDEC increased to a 13% tax credit for expenditure incurred on or after 1 April 2020. As RDEC is subject to corporation tax, the net of cash benefit is currently 10.53%
  • SME SCHEME: The SME R&D Scheme is currently an additional 130% tax deduction for qualifying expenditure. So this equates to a 24.7% cash benefit for profitable companies, and up to 33.35% cash benefit for loss making companies that can claim the SME “tax credit”. Also note that following the 2021 Budget, SME tax credit claims are now subject to an annual cap of £20k plus 300% of the company’s PAYE and National Insurance Contributions liability.

The other major difference with the RDEC scheme is that you cannot claim for costs paid to limited company subcontractors.

Subcontracting vs. Inhouse

If your business sub-contracts R&D work to a third party subcontractor (unconnected to your company) – you will still be able to claim for some qualifying costs but the relief may only be 65% of those costs.

NOTE. If you have taken on subcontracted R&D work to your business, you might not be able to claim R&D tax relief at all, or the only route available to you is under the RDEC scheme – reducing your claim to 10.53% of the qualifying expenditure.

Profit Position vs. Loss Position

The upfront cashflow benefit is actually greater for loss-making SMEs. Here’s a look at the how this affects the rates:

Loss: If you’re going to be in a loss position, then HMRC will make a cash payment to you of up to 33.35p for every £1 spent on R&D activities.

Profit: If you’re going to be in a profit position then HMRC will make a cash payment to you (or offset against your corporation bill) of up to 24.7p for every £1 spent on R&D activities.

Then timings come into play….

Loss: If your company is going to make a loss, you can make the claim as soon as your accounts are prepared and ready for filing.

Profit: If your company is likely to be profitable, it’s a little different. The biggest benefit will come by reducing the tax bill which is due nine months after your year end.

Diagnostax. If your company is likely to be profitable, it’s a little different. The biggest benefit will come by reducing the tax bill which is due nine months after your year end.

R&D for Financial Forecasting

As you can see there’s actually a lot to consider when it comes to forecasting your R&D claim. Any steps taken towards getting a more accurate idea of your R&D claim in advance of the project are worthwhile.

If you are a business that is already claiming R&D tax relief, you should be able to retrospectively use the information from your previous claims to help you navigate some of the more challenging nuances of R&D tax relief.

THINK YOU MIGHT BE ELIGIBLE TO CLAIM?

If you think you might be eligible to claim R&D Tax Relief, or you’d like to discuss your R&D claim with us, please book a call.

Outsourcing Costs vs. In House

Diagnostax Blog 3: R&D Outsourcing Costs vs. In House

Should I outsource my R&D activity or keep it in-house?

If you’re considering whether to bring some or all of your R&D project work inhouse versus outsourcing it, you’ll want to feel confident that you are making the right decision for your business operationally, but also to maximise your R&D claim.

Perhaps you’re about to kickstart a new R&D project, or you’re thinking about outsourcing as you don’t want to take on a new employee. Either way, we want to equip you with all the info you need to determine the best way to incur your R&D development costs: in-house or outsourced.

In the world of R&D you’ll often see outsourcing referred to as ‘subcontracting’. Let’s start with some definitions and explanations of what we mean when we say ‘subcontracting’.

SUBCONTRACTED WORK IN R&D PROJECTS

When it comes to R&D, subcontracted work is defined as when you contract and pay someone else to carry out R&D project activity on your behalf.

There are two scenarios to be aware of when it comes to subcontracted work in R&D projects:

SCENARIO 1: A business subcontracts work to you

If a business subcontracts R&D work to your business, you might not be able to claim R&D tax relief, or only a limited claim is available to you under the RDEC scheme – reducing your claim to 10.53% of the qualifying expenditure.

SCENARIO 2: Your business subcontracts work to a third party If your business subcontracts R&D work to a third party (unconnected to your company) – you can still claim for qualifying costs but the relief available is only 65% of those costs.

ONLY 65% OF COSTS CAN BE CLAIMED

ONLY 65% OF COSTS CAN BE CLAIMED

As you can see, before you make any decisions, there are some key points to consider, to determine the best way to incur your R&D development costs: in-house or outsourced.

As outlined above, if you are a business undertaking an R&D project for your own business, and you have sub-contracted part of the R&D project to a third party, you can only claim for 65% of the costs – and the R&D work must be for a specific part of the project.


Here’s an example of what this might look like for a business:

A UK company has an R&D project and they are considering whether to subcontract the design stage of the project, or use an in-house employee. The design stage is expected to take 6 months.

The annual salary of an adequately skilled employee is estimated at £60K.

CostEmployeeOutsourced
6-month salary£30,000 
Estimated additional fringe costs (pension, NIC, etc)£5,000 
Payment for project work to outsourcer £35,000
Initial cash cost to company£35,000£35,000
R&D allocation*90%100%
Subcontractor restrictionNil65%
R&D expenditure claimable£31,500£22,750

*You’ll notice the allocation of R&D time is slightly higher for the outsourcer, as employees are likely to have other responsibilities.

Let’s take a look athow the potential benefit breaks down for the Company:

A) For a Profitable Company

Corporation tax saving due to R&D£7,780.50£5,619.25
Difference£2,161.25 

B) For a Loss-Making Company

Tax credit claim£10,505.25£7,587.125
Difference£2,918.125

If the business is the subcontractor, they may not be able to claim under the SME R&D Scheme, but if they qualified under the RDEC scheme at 10.53% of qualifying expenditure:

Cash refund£3,316.950
Difference£3,316.95 

So when it comes to the numbers, it’s clear to see that the tax saving is more attractive if you go down the in-house route.

However, taking on a new employee is a big call to make, as it comes with its own challenges. There’s the cost and time involved in finding the right person, with the right skillset that will fit into the business. Then there is the ongoing time of managing that person. It’s a significant commitment to make

NOT CONVINCED IN-HOUSE IS THE RIGHT WAY?

If you’re on the fence when it comes to keeping your R&D in-house, here are some important pros and cons to consider if you’re considering the possibility of outsourcing your R&D……

keeping your R&D in-house pros

PROS

  • NO IN-HOUSE EXPERTISE: Sometimes you just don’t have a choice! For example you may be looking to develop a new app but with no expertise, subcontracting to a company with the expertise is the only option.
  • ACCESS TO MORE TALENT: By subcontracting, you have access to a greater pool of talent, global even!
  • CHEAPER & FASTER: When it comes to R&D projects that are completely different to anything that you have done in the past, it can be much cheaper and faster to look at subcontracting rather than setting everything up in-house from scratch.
  • SYSTEMS & PROCESSES: A quality subcontractor will already have the robust systems and processes in place to ensure the R&D work is tracked and expectations are managed – potentially a huge weight lifted.
  • STAY FOCUSED: Outsourcing to a subcontractor helps to keep your business and its resources focused on what it is already doing.
keeping your R&D in-house cons

CONS

  • THEY DON’T KNOW YOUR BUSINESS: It can be difficult for sub-contractors to have the same level of understanding of your business as your employees. However, this doesn’t always have to be a negative, sometimes a different perspective is what is needed for innovation.
  • CONFLICT IN EXPECTATONS: It’s important expectations are managed, as differences of opinion can arise when it comes to the brief, the objectives or the quality of the work. This is particularly tricky if the requirements of the R&D work change after the project has started.
  • CONTROL & TIMING: Letting go of control, and the day-to-day running of the project work can be difficult. But the best way to address this is to discuss your requirements and agree milestones or check points to ensure the timely delivery of the project. The subcontractor should have processes in place ready to tackle this.
  • IP & CONFIDENTIALITY: Management of intellectual property, and the potential leaking of information is a risk when you take your R&D activity outside of your business. It’s easier to manage, and less likely to happen when all of your R&D activity stays in-house.
CONS •	THEY DON’T KNOW YOUR BUSINESS: It can be difficult for sub-contractors to have the same level of understanding of your business as your employees. However, this doesn’t always have to be a negative, sometimes a different perspective is what is needed for innovation.   •	CONFLICT IN EXPECTATONS: It’s important expectations are managed, as differences of opinion can arise when it comes to the brief, the objectives or the quality of the work. This is particularly tricky if the requirements of the R&D work change after the project has started.   •	CONTROL & TIMING: Letting go of control, and the day-to-day running of the project work can be difficult. But the best way to address this is to discuss your requirements and agree milestones or check points to ensure the timely delivery of the project. The subcontractor should have processes in place ready to tackle this.   •	IP & CONFIDENTIALITY: Management of intellectual property, and the potential leaking of information is a risk when you take your R&D activity outside of your business. It’s easier to manage, and less likely to happen when all of your R&D activity stays in-house.

THE VERDICT?

So, there you have it. Unfortunately, there isn’t a black and white answer. We’re sorry! Whether you outsource aspects of your R&D project has to be right for your business. Our advice? First, start with the calculations. Can you afford to lose 35% of your R&D claim money coming back into your business? Then, it is a case of being honest and looking at the business case of bringing in a new employee – how do the pros and cons stack up?

THINK YOU MIGHT BE ELIGIBLE TO CLAIM?


If you think you might be eligible to claim R&D Tax Relief, and you’d like to find out more about how we can help you make your claim, please book a call.

Diagnostax. R&D project fails

Diagnostax Blog 8: Failed R&D Projects

Can I claim tax relief for failed R&D projects?

Failure is a reality of life, and the same applies in business. Failure comes hand in hand with innovation; it’s a by-product of learning and development. So to innovate, is to take a risk. When you start an R&D project, you have no guarantee that the project is going to be a success. You know that. That’s why R&D tax credits exist, to incentivise businesses to take that risk.

FAILED R&D IS STILL R&D

R&D tax relief is not solely aimed at rewarding successful projects, it is intended to incentivise certain behaviour in businesses. The Government Guidelines on the meaning of research and development for tax purposes, clearly state: “Even if the advance in science or technology sought by a project is not achieved or not fully realised, R&D still takes place.” (Paragraph 10)

Diagnostax. Failed R&D is still R&D

Here’s four points you should consider if an R&D project you are working on fails:

  • Not all projects achieve the advance in science or technology they are seeking:
    As long as the projects seeks to achieve an advance in science or technology and completes work to attempt to resolve the scientific or technological uncertainty, R&D applies.
  • Projects that fail can often be the most fruitful, from a learning perspective:
    The information from these projects is invaluable. The more you fail, the more you learn and get closer to your goal of success.
  • If a project fails, keep a record of why:
    If it’s a technical reason make sure you raise this with us, and that we consider this when you claim.
  • If a project fails for business, commercial or legal reasons, it’s not a failed R&D project:
    You still have to look at the advances sought, and technical difficulties and challenges faced. Provided the project meets these criteria, you can claim, whether or not you achieved the intended outcome.

FAILED PROJECTS THAT CLAIMED R&D

SOFTWARE:

Diagnostax. FAILED PROJECTS THAT CLAIMED R&D

Attempted integration of several systems for a bespoke enterprise resource planning system, where APIs were either not set up or of limited use. Significant time and effort went into trying to find a workable solution, but technical difficulties lead the project to be put on hold whilst other solutions were considered. The investment of staff time and external subcontractors had run to £120k and lead to an R&D tax refund of £25k in total.  

ENGINEERING:

Diagnostax. FAILED R&D FOR FUNDING

Development of an adjusted process to reduce waste in the manufacturing process. The company manufactures car parts and was trying to find ways to reduce the waste materials produced in the production process. After trialling three different methods and testing new materials, no significant reductions in waste were available. The project was abandoned due to other business areas becoming prioritised when the market changed due to Covid. The in-house team’s time and some materials and tooling costs were incurred, which resulted in a tax credit refund of £55k.

FAILED R&D FOR FUNDING

An R&D Tax claim can be a very welcome friend, following the financial hit of a failed project, it takes the edge off the risk and enables further investment into innovation.  It’s a great way to fund R&D projects and claw back the losses from the failed work, so you can go again. If successful, R&D tax credits can provide businesses with the funding to kickstart further projects and enable a continuous flow of funded innovation.  And innovation promotes more innovation.


THINK YOU MIGHT BE ELIGIBLE TO CLAIM?

If you think you might be eligible for R&D Tax Relief, and you’d like to find out more about how we can help you make your R&D claim, please book a call.

Diagnostax. R&D Recordkeeping

Diagnostax Blog 10: R&D Recordkeeping

9 R&D record keeping habits your business needs

Surprisingly HMRC doesn’t set out any specific record-keeping requirements when it comes to R&D tax claims. It recognises that every business operates differently and the way they keep their records will reflect this. HMRC also understands that first time claimers won’t have fully audited records. However, if you’re not first time claimers it is good practice to establish a reliable record-keeping system as early as possible. This will only improve the success, and possibly enhance the value of your claim refund. More funds means more projects and less chance of HMRC questioning your costs for eligibility. 

With that in mind we want to share some good practice habits to establish in your business when it comes to record-keeping.

BUT FIRST, WHY IS IT IMPORTANT TO KEEP RECORDS?

Well, the records you keep for the time and money invested on research and development are the audit trail for your R&D Tax Relief claim. To make a claim, you need to be able to realistically prove to HMRC your expenditure. The records you keep will need to: demonstrate a systematic approach to R&D activity, evidence all qualifying spend and validate any innovations made were not ‘by chance’

1.KEEP A LIST OF PROJECTS

The simplest and most effective thing you can do, is setup a list of all the R&D projects your business has worked on over the last 12 months, including any new ones. If you’re unsure whether a project is R&D, stick it on the list and start recording. It’s better to have the information recorded when it comes to crunch and then it can be ruled it in or out.

WHAT INFORMATION SHOULD I RECORD?

Here’s an overview of the key information you should be recording for each R&D project:

2. DIRECT PEOPLE COSTS

Keep a record of time spent by directors, employees, and any other qualified staff working on R&D projects. These records will be used to apportion the salary and any other costs that can be allocated to the claim. First you’ll need to identify the projects each employee worked on during the year. Then for each project the qualifying R&D activity delivered by the employee and the time taken.

Records include:

  • Salary (pension, NIC, Bonuses)
  • Reimbursed Expenses (any travel, accommodation, subsistence costs related to R&D project and reimbursed via an expense claim)
  • Time sheets if applicable (we will talk timesheets later!)

3. SUBCONTRACTOR COSTS

Keep a record of all subcontractors (connected and unconnected) working on any R&D projects. Connected subcontractors, are those where two companies are controlled by the same person or are part of the same group. A record should be kept for all ‘paid for’ subcontractor invoices. We’d always recommend splitting up the two categories to record connected subcontractor costs and unconnected subcontractor costs separately.

Records include:

  • Invoices relating to all these costs
  • Contracts
  • Time sheets if applicable

4. MATERIALS & CONSUMABLES

Keep a record of costs for all materials and resources consumed as part of your R&D project, this includes materials, water, light and heat.

Records include:

  • Invoices relating to all material costs
  • Invoices relating to water, light and heat costs

5. SOFTWARE COSTS

Keep a record of all software licences used, specifically on the R&D project. If the software was bought for use in the R&D project only, you can claim 100% of its price. However, if the software will only be used partly in your R&D project you will need to apportion the costs. 

Records include invoices relating to all these costs, and what they were used for.

6. RELATED PROTOTYPE COSTS

Keep a record of all costs linked to the design and production of a prototype needed to test the R&D project. We often see this one slip through the net!

Records include invoices relating to all these costs.

SETTING UP RECORD-KEEPING SYSTEMS

The best place to start is with the systems or processes you already have in place for record-  keeping and identifying how they can be modified or enhanced to be even more accurate. Here’s some ideas for different levels of record-keeping systems you can introduce into your business processes, starting with people time.

7. PEOPLE TIME

Cloud-based timesheets

Timesheets are perfect for recording employee time spent on R&D projects and provide a great audit trail for your R&D claim. There are loads of systems such as Meistertask, Trello, Asana and Basecamp, which you can use to record and track all project related activity, including people time.

However, these systems do require commitment and rely on timesheets becoming an integral part of your culture. Employees will need to log all the activity, and the number of hours spent against a specific project. If it can be adopted, it is a really effective way to report on employees contribution to projects. We can recommend a free app called Clockify. You can report on individual employees, or teams & R&D projects and export reports.

Spreadsheets

You don’t have to go all out and integrate a cloud based timekeeping system. Spreadsheets can do the trick. You might find it easier to get started with a spreadsheet and trial whether timesheets is something that could work for your business. The same logic applies; log projects, tasks and time spent at the end of each day. Review this weekly or monthly to ensure you have recorded all time spent.

Email calendars

If your business uses Outlook or Gmail calendars to log ALL meetings and tasks, a sensible way to trial out timesheets, is by using the categories feature. Set up a colour code system for your R&D projects and when scheduling your time apply the correct colour. At the end of each week you can very quickly estimate the time spent across different projects in the business.

Project meetings

It might be that a timesheet system isn’t right for your business, but that’s okay. If that’s the case, you could use meetings as an opportunity to take minutes and record the input from employees involved in R&D projects. You could set up a weekly projects meeting, or include an R&D slot in an existing team meeting. No one likes a meeting for meetings sake.

8. OTHER R&D COSTS: MATERIALS, CONSUMABLES, SUBCONTRACTORS

For all other costs, your accounting system will become your best friend. You can easily set up R&D codes for each project within your nominal ledger. Codes can be allocated to expenses from expenditure on, materials, sub-contractors, consumables, software licenses. However, you need to make sure that the code system is clearly communicated to everyone that will be expected to use it. We have had cases where clients have taken this a little too literally and started to record EVERYTHING under the new codes! Oops! That’s one way to get an HMRC enquiry…..

9. SUBCONTRACTOR PROJECTS

Where you are using subcontractors that also work on projects outside of the scope of R&D, it’s all about communication. Agree how you would like them to identify R&D project work and ensure they stick to it. Little tips like this just make it easier to add the invoices to your system accurately using the correct code.

THINK YOU MIGHT BE ELIGIBLE TO CLAIM?

If you think you might be eligible for R&D Tax Relief, and you’d like to find out more about how we can help you make your R&D claim, please book a call.

R&D Blogs for you

R&D Blogs all of the advice and guidance you need in one place to better understand research and development.

It’s time to put your front foot forward…manage risk…educate…raise awareness…
create opportunity and protect yourself.

And we’ve done the leg work for you.

R&D in one place

R&D Blogs all of the advice and guidance you need in one place to better understand research and development.

It’s time to put your front foot forward…manage risk…educate…raise awareness…
create opportunity and protect yourself.

And we’ve done the leg work for you.

Diagnostax: R&D Blogs for you

R&D Blogs all of the advice and guidance you need in one place to better understand research and development.

It’s time to put your front foot forward…manage risk…educate…raise awareness…
create opportunity and protect yourself.

And we’ve done the leg work for you.

Secret R&D

Diagnostax Blog 12: Secret R&D

Are you sat on secret R&D?

Even though you already claim R&D Tax Credits, there’s every possibility your company could be sat on ‘secret’ R&D. But what do we mean by ‘secret’ R&D? Well, we often come across clients that have developed or built a product, process or service specifically for themselves without recognising that what they are doing is research and development. They are so focused on just ‘doing’ the work they do, they don’t recognise the steps they are taking. It’s only when you start thinking in a certain way that you begin to recognise that you are sat on products, service and processes that you could claim R&D Tax Relief for.

With that in mind, we want to share some examples, to give you an idea of the types of activity and situations in which secret R&D occurs.

ARE YOU SAT ON SECRET R&D?

Secret R&D can manifest in many different ways, through things like:

  • Investing in technology and bespoke integration to improve efficiency
  • Developing specialist software to resolve inefficiencies in business processes
  • Developing new products to improve service delivery
  • Developing an existing service to improve customer experience
  • Developing new systems to improve business processes

Here’s five real life examples of businesses that had been sat on secret R&D..

Are you sat on secret R&D?

Business: SAAS Technology solutions
Secret R&D:
Business as Usual
R&D Tax Refund:
£7.5K

Working with clients to deliver bespoke technology business solutions for a wide range of industries and business scenarios, this company delivers R&D qualifying projects pretty much every day. The business was so involved in the day-to-day, they didn’t recognise that they were delivering research and development, daily. The company had also invested significant resource into the development of their own technology solution, just seeing it as an internal project needed to improve their efficiency.

Working with a client they recently developed one of the UK’s most advanced smart metering platforms leading to just over £7.5K of R&D tax credits.

Business: E-commerce
Secret R&D:
Resolving Inefficiency
R&D Tax Refund:
£6K

Anecommerce business specialising in sports accessories, developed a specialist shipping integration software to improve inefficiencies in their business processes.Working with a subcontractor, they modified a program to make it more efficient for use within their business. Significant improvements were made to the software program to integrate the software into their systems, and the internal R&D project generated a claim worth £6k over a two year period.

Although the business set out to resolve inefficiencies in their business process, they were too involved in the project to recognise their own work to be innovative.

Business: Scaffolding contractors
Secret R&D:
Save Time & Money
R&D Tax Refund:
£22K
These guys are experts in scaffolding, specialising in the provision of scaffolding installations to a wide range of industries.They had invested in the development of a free-standing scaffolding structure to be used for internal scaffolding, primarily to save their time and cost when setting up jobs.

The company was clueless that what they had set out to do was an R&D project. They just wanted to save themselves time and money! However, in the process they developed a new innovative scaffolding product applicable industry wide and acquired a corporation tax repayment of over £22K for a two year period.

Business: Gastropub & Hotel
Secret R&D: Improve customer experience
R&D Tax Refund: £7K

A Gastropub and Hotel based in the North of England, wanted to provide a menu that catered for all tastes and needs, as they wanted everyone to find something really good on the menu. They knew it didn’t make economic sense to have a dozen different menus, so they worked on a new menu to cater for all dietary requirements.

The gastropub developed an innovative menu that could be produced to cater for vegan and gluten free diets, without compromising on the customer experience.

The owner was convinced there wouldn’t be a claim because it’s just ‘what they do’ but when he reflected on all the hard work that goes into crafting their menus he was able to see the numerous research and development steps in their work.

This work realised an R&D Tax claim of £7k for the gastropub.

Business: Fashion & Apparel
Secret R&D: Sales toolR&D
Tax Refund: £15K

A women’s clothing manufacturer and retailer, developed a unique sports clothing range for pregnant women which they understood would qualify for an R&D claim. However, alongside this they delivered a complex website project which included the development of a global directory of maternity fitness instructors. Developed as a sales tool, the business was completely unaware that they had built something completely new and innovative.

Altogether the R&D projects equalled a total benefit of just over £15K.

Ensuring you identify all the R&D in your business requires a mindset change, and cultural shift to make it work business wide. You have to change the way you think about what you are doing day-to-day. Encourage your employees to constantly challenge the way they – and others – do things, to make suggestions for improvements and bring forward new ideas.

You could be sat on secret R&D gold.


THINK YOU MIGHT BE ELIGIBLE TO CLAIM?

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