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Research and Development

Claiming Your R&D Tax Relief

The way in which HMRC deals with Research and Development (R&D) tax relief claims changed on 8th August 2023.

The current rules require any limited company that intends to make a claim for R&D tax relief to provide detailed information to HMRC in advance.

HERE To HELP

The criteria for claiming R&D tax relief are complex. Once you have established whether your project meets HMRC’s qualifying rules, Folkes Worton can help you with your claim.
Call us on 01384 376 964

In order establish whether your project or projects qualify for Research & Development tax relief, it is best to understand what HMRC defines as ‘R&D’. You will know your own industry, scientific area or technological development better than anyone, so we have included below HMRC’s own definitions. These will help you make an informed decision as to whether the work your are carrying out might qualify or not.

From that point, Folkes Worton will be happy to guide you through the process of submitting your advance information to HMRC and, once accepted, handle the claim on your behalf.

DEFINITIONS CONNECTED WITH ‘RESEARCH AND DEVELOPMENT’

(These Guidelines are issued by the Secretary of State for the purposes of Section 1006 Income Tax Act 2007. They replace the previous Guidelines issued 5th March 2004, updated 6th December 2010.)

  1. Research and Development (‘R&D’) is defined for tax purposes in Section 1006 Income Tax Act 2007. This says the definition of R&D for tax purposes follows generally accepted accounting practice. The accountancy definition is then modified for tax purposes by these Guidelines, which are given legal force by Parliamentary Regulations. These Guidelines explain what is meant by R&D for a variety of tax purposes, but the rules of particular tax schemes may restrict the qualifying expenditure.
  2. In these Guidelines a number of terms are used which are intended to have a special meaning for the purpose of the Guidelines. Such terms are highlighted (in BOLD CAPS) on first appearance and defined on a separate page – CLICK HERE for the Glossary of Terms.
  3. R&D for tax purposes takes place when a PROJECT seeks to achieve an ADVANCE IN SCIENCE OR TECHNOLOGY.
  4. The activities which DIRECTLY CONTRIBUTE to achieving this advance in science or technology through the resolution of SCIENTIFIC OR TECHNOLOGICAL UNCERTAINTY are R&D. 5. Certain qualifying indirect activities related to the project are also R&D. Activities other than QUALIFYING INDIRECT ACTIVITIES which do not directly contribute to the resolution of the project’s scientific or technological uncertainty are not R&D.

  1. An advance in science or technology means an advance in OVERALL KNOWLEDGE OR CAPABILITY in a field of SCIENCE or TECHNOLOGY (not a company’s own state of knowledge or capability alone). This includes the adaptation of knowledge or capability from another field of science or technology in order to make such an advance where this adaptation was not readily deducible.
  2. An advance in science or technology may have tangible consequences (such as a new or more efficient cleaning product, or a process which generates less waste) or more intangible outcomes (new knowledge or cost improvements, for example).
  3. A process, material, device, product, service or source of knowledge does not become an advance in science or technology simply because science or technology is used in its creation. Work which uses science or technology but which does not advance scientific or technological capability as a whole is not an advance in science or technology.
  4. A project which seeks to, for example:
    a) extend overall knowledge or capability in a field of science or technology; or
    b) create a process, material, device, product or service which incorporates or represents an increase in overall knowledge or capability in a field of science or technology; or
    c) make an APPRECIABLE IMPROVEMENT to an existing process, material, device, product or service through scientific or technological changes; or
    d) use science or technology to duplicate the effect of an existing process, material, device, product or service in a new or appreciably improved way (eg. a product which has exactly the same performance characteristics as existing models, but is built in a fundamentally different manner) will therefore be R&D.
  5. Even if the advance in science or technology sought by a project is not achieved or not fully realised, R&D still takes place. 11. If a particular advance in science or technology has already been made or attempted but details are not readily available (for example, if it is a trade secret), work to achieve such an advance can still be an advance in science or technology.
  6. However, the routine analysis, copying or adaptation of an existing product, process, service or material, will not be an advance in science or technology.

  1. Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field. This includes SYSTEM UNCERTAINTY. Scientific or technological uncertainty will often arise from turning something that has already been established as scientifically feasible into a cost-effective, reliable and reproducible process, material, device, product or service.
  2. Uncertainties that can readily be resolved by a competent professional working in the field are not scientific or technological uncertainties. Similarly, improvements, optimisations and fine-tuning which do not materially affect the underlying science or technology do not constitute work to resolve scientific or technological uncertainty.

More information on submitting your detailed information to HMRC before your claim and the required form can be found by CLICKING HERE

Get in touch with us to learn more 01384 376 964