One of the most difficult areas for companies considering making a claim is establishing what qualifies as R&D for the purposes of claiming tax relief or tax credits. What many companies don't fully understand is that R&D is found throughout the activity of their business and not just anything performed strictly and exclusively by their Research and Development team.
Once this is understood there are many more companies, in a wider range of sectors and industries, which are in a position to claim. R&D Tax Credit experts Innovation Plus, for example, have assisted clients in areas such as banking and finance - perhaps not ordinarily considered as R&D performers, these industries have made some of the largest claims in the country. This also applies to other areas, such as logistics and retail - and in fact, anyone who sub-contracts out software development can potentially qualify.
Here, then, are five surprising industries that could qualify for R&D tax credits:
Architects might not consider that they are involved in any R&D, but architecture often combines multiple disciplines where the design of a solution incorporates social and environmental concerns. By focusing on aspects of architectural engineering and technology, this can fall within the framework of UK R&D Tax legislation. There is a low rate of architects claiming credits, but they should consider it - a recent issue of Architectural Technology magazine carried a useful article on the subject.
The food industry is one in which it's possible to demonstrate the technological advances necessary to make an R&D claim. Research and development work which helps to extend the shelf life of a product; demonstrates a new knowledge of the effects of preservatives, colourings and additives; develops a higher nutritional content of food, or makes changes to flavour, fragrance, texture or form, could qualify.
Non-technical activities can qualify for tax relief, though it's a challenging scenario. The key test is whether these non-technical activities directly contribute to the resolution of technological uncertainty. In the car manufacturing industry, an example of a design project which might quality is determining the shape of the car's body. This is because this new design could subsequently have an effect on aerodynamics, fuel economy and performance. Design work which establishes a range of colours for a new vehicle launch would not qualify.
Within the textiles industry it's possible to provide examples of 'experimental development' projects which could qualify for R&D. This document provides guidelines for qualifying projects, citing the example of the design and creation of a Uniform 2D Stretch Swimsuit. A new process to produce fabric with the required stretch was used, which needed in-house trials and technologies.
As clean technology is an area ripe for technological pioneers, with plenty of resource devoted to development, it's no surprise that companies in this sector are frequently able to claim R&D Tax Credits. But the development work is not restricted to what takes place in a laboratory. Environmental initiatives which can qualify include recycling, sewage treatment, solid waste management and renewable energy.