Alternatively, you might think of a management hotshot talking about complex process modeling and synergising backwards overflow.
The reality of research and development work for many people is about as far from that as you can get.
Instead of huge, anonymous R&D departments, research and development is often carried out by individual workers. It doesn’t necessarily require multimillion pound budgets, it’s often a natural part of the daily problem-solving that is inherent within most businesses.
Regardless of your sector, there’s likely to be an element of your companies work that counts as R&D. These are six of those vital R&D functions that consistently surprise people, and could lead to significant tax savings for your company.
6. Bespoke Manufacturing Work
If you’re commissioned to create something, you might think that creating that particular thing is just your job – that you need no special reward above and beyond that.
In fact, you can often claim tax credits on bespoke and one-off manufacturing projects because of the problems that are inevitably thrown up when creating one-off items.
Retooling to work on unusual or unique projects means that your work could certainly qualify for R&D.
5. Responding To Customer Demands
Much like one-off manufacturing work, responding to customer demands entails a specific, personal response.
This means that an individual solution has to be found – and that means that you’re probably going to be engaged in research and development! If you consider yourselves to be specialists within your sector, and you need to bring in freelance talent or subcontracted workers with a particular skillset, because you don’t have the skills in house, these costly specialist workers can potentially add significantly to your claim value. Even the work of ancillary workers can potentially qualify, if other members of staff actively support the R&D function then a portion of their time can also likely qualify.
That ultra-demanding client company, continually pushing you to achieve something out of the ordinary, might just be enabling you to claim extra R&D tax relief – if the brief asks for something “that’s never before been done” or something “totally different” then the chances are that some of the costs will qualify for R&D tax credits.
4. Bespoke software development
One of the most significant areas for R&D tax credit claims is the development of bespoke software. Increasingly software is at the centre of driving organisational efficiencies, and harnessing technology to deliver core business values remains a perpetual challenge. The fast moving pace of change within the technology space, and the requirement for continuous improvement of software products are often the main drivers for further product enhancements. Many SMEs develop software to help solve their business challenges, and whether this is handled internally or outsourced to third parties this work can still qualify for significant levels of tax relief.
The scope of projects that can qualify is vast, whether it’s a bespoke solution to replace a variety of off-the-shelf solutions, or an automated system to replace multiple manual processes. If a project seeks to achieve operational efficiencies through the integration of disparate systems or the development of enterprise level applications, then the costs will likely qualify. Adapting systems to improve performance, security, scalability or availability can all qualify for relief. Re-designing systems using different technologies or programming languages, using mathematical modelling to better manage risk, or analyse financial data can be a hugely time intensive process. The development of complex algorithms, middleware, software connectors, the resolution of hardware and software conflicts and complex systems integration – it can all qualify for relief. Most people are surprised to learn that a loss-making SME that has invested £100k in internal software projects could receive almost £33k in R&D tax credits, a profitable SME could look to claim just under £25k against £100k of investment in qualifying software development.
3. Improving Your Own Working Process
One thing that few workers realise can count towards research and development tax credits is work that they put towards improving their own working environment and processes.
Whether you’re creating internal tools to help automate processes, or streamlining elements of your working practices, if it’s costing the company money and the solution arrived at represents an advance, then it could be eligible for R&D tax credits.
2. Getting Your CMS To Do Its Job Properly
There are a number of Content Management Systems which are notoriously hard to work with. We won’t name and shame them here, but if you work with them you know the ones we’re talking about.
If you’re spending time getting your CMS to deliver the functionality you need, amending or adapting the original code, then it could be the case that this counts as research and development, even creating browser plugins to fulfil specific functions can qualify.
1. Working With Obsolete Legacy Systems
If it seems counter-intuitive that carrying out a unique project could count as R&D, it might seem outright bizarre that working with old-fashioned, out-dated or obsolete systems could count as research and development.
If you’re working with legacy systems, though, you need a way to interact with them that makes sense to modern systems, tools and machines. If you’re creating a way for modern systems to interact with legacy systems, this could very easily count as research and development work. Systems relying on programming languages such as COBOL, Visual Basic, CICS, REXX, DB2, TSO, ISPF, Syncsort and DFSort are still relatively commonplace, despite projections that they’d be obsolete before Y2K. If you work with these languages and don’t currently claim R&D tax credits then you almost certainly need to speak with an R&D specialist – if you’re currently approaching the end of an accounting period then you need to do so urgently!
Told that your Company Doesn’t Qualify for R&D Relief?
The most common issue that we come across is that companies fail to identify the work that they do as R&D, and therefore fail to take advantage of the benefits available to them. We often find that a company has been told that they don’t qualify for R&D tax credits by various business advisers who were far from qualified to properly advise on the topic. It’s a highly specialised area, and the guidance has widened significantly over recent years, if the advice you’ve received has not come from an experienced R&D specialist, with experience of your sector, then it’s very unlikely it can be wholly relied upon. It’s an area where a little knowledge can certainly do more harm than good! If you’re working for a company that is doing something out of the ordinary, and feel your approach offers an advance on the available alternatives, then it can most likely qualify for R&D tax credits. To find out if you could qualify for research and development credits, get in touch today!