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    Does my business qualify for R&D tax relief?

    Innovation is key to moving your business forward and the UK government want to accelerate this by offering incentives to encourage companies to push the boundaries of science and technology through Research and Development (R&D) activities.

    However, there’s an important difference between improving your own company’s knowledge, and helping the whole industry grow. Just because research and development activities have taken place it doesn’t mean a company qualifies for R&D tax relief.

    In our latest blog, we break down the differences…

    Company advance: improving your own business

    When a company focuses on a ‘company advance’ in R&D, it’s all about making itself better. That means working on things like internal processes and skills, and making sure it can compete well in the market. The R&D is aimed at creating new products, services, or ways of doing things that directly help the company.

    However, these improvements likely do not help the industry as a whole. While some projects may accidentally help others, things like making better products or improving your own technology may not result in a successful R&D tax relief claim if there are no advances in overall science or technology.

    Industry advance: boosting everyone

    On the other hand, ‘industry advance’ in R&D is about making the whole industry better. These R&D activities are undertaken to advance an entire industry or sector by addressing scientific or technological uncertainties.

    You do not have to release this information to your competitors to be eligible for R&D tax relief, but you MUST be advancing the overall knowledge and capabilities of the industry or sector.

    Industry advance projects often involve collaboration among multiple companies or organisations, aiming to improve industry-wide standards, address technical uncertainties, and drive innovation on a broader scale.

    Why it matters

    Understanding the difference between company advance and industry advance is crucial when it comes to claiming R&D tax relief. It affects the activities you can claim for and how much tax relief you receive. Before making a claim, companies must consider:

    • The advance in science or technology the project seeks to achieve
    • The information which is in the public domain and how you compare to the baseline
    • Whether the uncertainties are technical in nature and if they can be overcome through routine methods.

    Only projects seeking an industry advance fall within the definition of qualifying R&D activities for tax purposes. We would recommend carefully evaluating your business activities to ensure they meet the criteria.

    By knowing the distinction, businesses can make sure they’re using the incentives in the right way and are only claiming for eligible projects.

    Get in touch

    If you are unsure if you qualify for R&D tax relief, or you have previously made a claim and would like our R&D experts to identify any potential areas of risk and provide tailored advice to refine your claim and record-keeping process, get in touch with corporate tax director, Claire Astley, by clicking the button below.

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    For more information about anything in the above article, please get in touch using the button below.
    Claire Astley
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