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The ForrestBrown A-Z of R&D tax credits

Peter Beavis Sector Specialist
Senior Sector Specialist
Read time:
lamp shining on A to Z of R&D Tax Credits

The world of research and development (R&D) tax credits might not always seem as straightforward as ABC… but with our expert help, it can be.

The world of research and development (R&D) tax credits might not always seem as straightforward as ABC… but with our expert help, it can be.

Introducing the ForrestBrown R&D dictionary

At ForrestBrown, R&D tax credits is all we do. Our team is made up of chartered tax advisers and technical specialists from a variety of industries. And so, to help you navigate the world of research and development, we’ve picked tax and technical brains alike to create an A-Z dictionary of R&D.

A is for: aggregation  agg-ruh-gay-shun

Tax definition – 1. The adding together of a taxpayer’s income in order to determine the applicable tax rate for income tax purposes.

R&D definition – 1. The gathering of data for representation, usually online. For example, Skyscanner is an online flight aggregator.

B is for: base  beys

Tax definition – 1. A base cost is used in capital gains tax legislation to denote the cost of an asset to an owner. 2. Baseline – Whether you have carried out R&D for tax purposes is defined by reference to the existing technological baseline.

R&D definition – 1. A substance that can accept a hydrogen ion (H+) from another substance. A chemical can accept a proton if it has a negative charge, or if the molecule has an electronegative atom like oxygen, nitrogen, or chlorine that is rich in electrons. Like acids, some bases are strong and others are weak.

B is also for: beavis bee-viss

… and the name’s Pete Beavis. Pete Beavis is our in-house materials scientist – he has 33 letters after his name, covering 12 of the total 26 letters in the alphabet! Pete likes his vodka martinis like his lab-based substance vibration tests: shaken, not stirred.

C is for: capitalize cap-it-all-ize

Tax definition – 1. To record capital outlays as additions to asset accounts, not as expenses.


R&D capital expenditure and R&D allowances – are you missing out on valuable deductions?

D is for: double-entry duh-bull-enn-tree

Tax definition – 1. A term used to refer to how accountants record business transactions, using debits and credits. We explain the accounting treatment of R&D tax credits, including double entry accounting, in our KnowledgeBank article.

E is for: eligibility el-ej-i-bill-i-tee

Tax definition – 1. The state of whether or not a company qualifies for R&D tax credits. To be eligible, you’ve got to be a limited company subject to UK Corporation Tax, carrying out R&D and  have spent money on that work. Many businesses aren’t aware that they’re eligible for the UK’s research and development (R&D) tax credit schemes. Watch our handy eligibility video below to find out if your business qualifies.

E is also for: enquiry enn-kwire-ree

Tax definition – 1. An enquiry is when HMRC ask for more information to clarify any questions they may have about your R&D tax credit claim. HMRC enquiries can seem daunting. But if you take due care in preparing your claims, you should have no reason to worry. ForrestBrown can support you through the entire process. Our end-to-end R&D tax credit claim process has quality assurance steps built-in to give you absolute confidence in your claim.

HMRC will open enquiries into a proportion of all R&D tax credit claims. These reviews are part of HMRC’s responsibility for properly distributing the available government funds through the R&D tax incentives.

F is for: floor flor

Tax definition – 1. The lower limits on tax benefits and detriments.

R&D definition – 1. The lower surface of a room – usually situated below the ‘ceiling’.

F is also for: ForrestBrown-er four-ist-brown-err

1. Our in-house gin distilled by Psychopomp Distillery. After a busy quarter in the office delivering for clients, we like to kickback with a well-earned glass or two.

G is for: glass ceiling glass-see-ling

Tax definition – 1. An unacknowledged barrier to advancement especially affecting women and members of minorities.

R&D definition – 1. Situated above the floor – though below it alphabetically – a ceiling made of glass.

H is for: hybrid hai-brid

Tax definition – 1. An R&D tax credit claim which is entered under both the SME and RDEC incentives is known as a hybrid claim. For example, if a business has made use of a grant, they may be eligible to also claim R&D by making use of both schemes.

R&D definition – 1. Something made by combining two different elements; as in: a hybrid petrol-and-electric car.

I is for: intangible in-tan-jih-bull

Tax definition – 1. An intangible (an intangible asset) is one which is not physical in nature. Corporate intellectual property, including items such as patents (see our entry for P), trademarks, copyrights and business methodologies, are intangible assets. Some software R&D costs are also intangible assets.

Industrial Strategy 2017, research and development (R&D) and the UK tax system

What happens if I have no records of my R&D?

R&D definition – 1. Not able to be touched, or grasped (unlike a crisp cold brew from our beer fridges on a Friday). Your R&D project may have intangible outcomes: such as a more efficient production method, reduced costs, or less waste material.

J is for: judgement juhj-ment

Tax definition – 1. Your R&D tax credit claim should demonstrate sound judgement on the part of the competent professional. The judgement of the competent professionals is a crucial part of any R&D tax-credit claim.

K is for: knowledge noh-lehj

1. Facts, information, and skills acquired through experience or education; the theoretical or practical understanding of a subject. An advance in science or technology for R&D purposes can be an extension of the overall level of knowledge in a particular field.

We share our knowledge with you and answer all the common (and some not-so-common) questions about R&D tax credits in the ForrestBrown KnowledgeBank.

L is for: liquidation lih-kwih-day-shun

Tax definition – 1. The process of a company being dissolved or wound up, and its assets, if any, after payment of its debts, distributed to the shareholders.

M is for: methodology meth-od-ol-oh-jee

R&D definition – 1. A system of methods used in a particular area of study or activity. For example: your R&D claim will explain the methodology you have used to apportion your associated costs. Your R&D projects must be conducted to a method or plan and may follow a particular developmental methodology: Agile, or Waterfall, for instance.

Tax definition – 1. your R&D tax credit claim will explain the methodology you have used to identify R&D projects and your associated qualifying R&D costs.

N is for: net neht

Tax definition – 1. Net profit is your business’ income less all relevant expenses. Net also refers to net of tax, e.g. VAT on goods or services.

R&D definition – 1. A mesh-like filtration material commonly used in the salt- and fresh-water angling communities for catching marine life.

2. Net (technically, ‘dot net’) is a software framework developed by Microsoft that runs primarily on Windows. It provides code language interoperability across several programming languages. Many developers use the .Net framework in their R&D activity.

O is for: optimize op-tih-mize

Tax definition – 1. To achieve the best possible value for your R&D tax credit claim. With ForrestBrown, you can have confidence that the impact of your claim is fully maximised, yet protected from HMRC enquiry. 2. Fine tuning and optimization does not qualify as R&D, unless you are making an appreciable improvement to technology.

R&D definition – 1. To make something the best it can be for performance.

P is for: patent pah-tuhnt

Tax definition – 1. A government authority or licence conferring a right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention. More colloquially, ‘patent’ is used to describe the right granted to anyone who invents any new, useful, and non-obvious process, machine, article of manufacture, or composition of matter. R&D work can go hand-in-hand with this kind of innovation.

R&D definition – 1. Patent leather is a type of coated leather invented in 1818.

P is also for: plank plahnk

1. Here at ForrestBrown we like to hold the occasional team planking competition… it’s good for the core, as well as a bit of friendly competition.


Q is for: qualifying costs kwol-if-eye-ing-cohsts

Tax definition – 1. The costs from your innovation project that count as qualifying expenditure within your R&D tax credit claim. These can include items such as staff costs, consumables and software.

Q is also for: quality assurance kwah-la-tee-uh-shor-unce

Tax definition – 1. At ForrestBrown we have a rigorous in-house quality assurance process. We have never had a claim rejected because our team of chartered tax advisers, sector specialists, and former HMRC inspectors will review every claim before it is submitted to ensure it is as robust and well-presented as can be.

R&D definition – 1. The maintenance of a desired level of quality in a service or product, especially by means of attention to every stage of the process of delivery or production.

R is for: ring fence ring-fenss

Tax definition – 1. A theoretical enclosure established by tax legislation around certain profits, losses, transactions or groups of transactions in order to isolate them for tax purposes.

R&D definition – 1. A fence made of rings.

S is for: solvent soll-vuhnt

Tax definition – 1. Having assets in excess of one’s liabilities: e.g. the company is a going concern. This is part of the minimum eligibility criteria for claiming R&D tax credits.

R&D definition – 1. Able to dissolve other substances; used as a noun, ‘solvent’ refers to the liquid in which a solute is dissolved to form a solution.

T is for: turnover turn-oh-vurr

Tax definition – 1. The volume of business of an enterprise as set forth in the profit and loss account, usually measured by reference to the gross receipts, or gross amounts due, from the sale of goods or services, etc. supplied by the entity.

R&D definition – 1. A folded croissant-like pastry, often filled with apple or cheese. You’d be surprised about the potential for R&D in cheese-making: watch senior tax manager Nikki Heydon explain the R&D in cheese-making here. Nikki lives near Cheddar and is married to a stinking bishop.

Balancing value, risk and time: How ForrestBrown helped PSS Engineering recalibrate its approach to R&D

U is for: uplift up-lihft

Tax definition –  1. The profit margin on costs, often used in the context of transfer pricing to calculate a fair market rate. 2. The act of increasing an existing R&D tax credit claim. If you missed out on claiming qualifying costs in a previous period, it is possible to amend your existing R&D tax credit claim provided you do this within two years of the end of that accounting period.

R&D definition –  1. The act or force by which something is raised above a given level; as in: ‘the uplift that ForrestBrown gave my R&D tax-credit claim gave my day a massive uplift.’

W is for: What happened to V? wot-hap-UHND-too-vee

X is for: X ex

Tax definition –  1. X marks the spot … in box 650 or 655 in your CT600.

R&D definition – 1. eX-HMRC inspector: we have two of them on our team at ForrestBrown.

Y is for: yield yeeld

Tax definition – 1. Taxable equivalent yield (also called equivalent taxable interest rate) is the return that is required on a taxable investment to make it equal to the return on a tax-exempt investment. The taxable equivalent yield is commonly used when evaluating municipal bond returns.

R&D activity definition – 1. To produce or provide (a natural, agricultural, or industrial product). But also a noun: the quantity or amount of produce that is returned from a given process.

Z is for: zone zown

Tax definition – 1. A free-trade zone (FTZ) is a specific class of special economic zone. It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured, and re-exported under specific customs regulation and generally not subject to customs duty. Free-trade zones are generally organized around major seaports, international airports, and national frontiers—areas with many geographic advantages for trade.

R&D activity definition – 1. An area or stretch of land having a particular characteristic, purpose, or use, or subject to particular restrictions.

Contact ForrestBrown today

Our A-Z demonstrates just how broad the definition of R&D is. It also highlights why ForrestBrown is the best in the business. Our tax team and sector specialists come together with an eye for detail and passion for innovation to ensure your business reaps maximum benefits from the scheme. If you think your company may qualify or you’re looking for a new provider for R&D tax credits, call our tax experts now for a no-obligation chat.rnrnNow you’ve read our technical and tax technical definitions, hopefully you’ll recognise just how broad the definition of R&D is. If you think your company may qualify for R&D tax credits, call our tax experts now for a no-obligation chat.