Research & Development (R&D)

Research & Development (R&D)

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R&D, short for Research & Development, is the process undertaken by companies to acquire new knowledge, enabling them to innovate and evaluate new products, services, and procedures. It involves activities aimed at generating breakthroughs and driving advancements within the organization.

R&D plays a vital role for companies, particularly in the initial phases of innovation, providing a competitive edge. However, it can pose financial risks if projects do not yield desired outcomes. That’s where R&D tax credits come in.

If your business invests in R&D, you may qualify for tax credits, offering potential financial benefits for your R&D expenditures.

Research & Development Tax Credit

Gorilla’s ongoing accounting and tax service work alongside the R&D offering. We can take care of all your company’s accounting needs with our regular accounting service and assist with the R&D claim in addition to this.

What are R&D Tax Credits and how do they work?

The UK government has introduced R&D tax credits as an incentive scheme to foster business growth, innovation, and development. Through this scheme, companies can recover up to 33.35% of their R&D expenditure either as a reduction in Corporation Tax or as a cash repayment.
These funds are tax-free and can be utilised for various purposes, including hiring new staff or investing in equipment. Essentially, this scheme allows businesses to claim back a portion of their investment in innovation.

Do I Qualify for R&D Tax Credits?

When it comes to industries, there are no rigid restrictions on which companies can apply for R&D Tax Credits. Eligibility is open to companies across all industries. The key requirement set by the government is that the company must have engaged in “qualifying research and development activities” to be eligible for the credits.

What projects can be included as R&D?

To qualify for R&D relief, your work should be part of a project aimed at making advancements in science or technology (excluding social sciences like economics). Additionally, the projects should be relevant to your trade, either existing or in development due to your R&D efforts. It is essential to be able to articulate how your work has:

  1. Resolved scientific or technological uncertainties: Your project should address uncertainties or challenges in the field, seeking to overcome them through research and experimentation.
  2. Achieved innovation or improvement: Your work should aim to develop new products, services, or processes, or enhance existing ones, showcasing innovation or improvement within your industry.
  3. Demonstrated a systematic approach: You should demonstrate that your R&D activities followed a systematic process, involving analysis, experimentation, and evaluation to reach desired outcomes.
  4. Overcome technical challenges: Your project should involve tackling technical hurdles or obstacles, pushing the boundaries of current knowledge or capabilities within your field.

By meeting these criteria, your work may qualify for R&D relief, making you eligible to claim the associated tax benefits.

  • Looked for an advance in science and technology.

  • Overcome uncertainty.
  • Could not be easily worked out by a professional in the field.
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How Do I claim R&D?

To qualify for R&D relief, your work should be part of a project aimed at making advancements in science or technology (excluding social sciences like economics). Additionally, the projects should be relevant to your trade, either existing or in development due to your R&D efforts. It is essential to be able to articulate how your work has:

  1. Resolved scientific or technological uncertainties: Your project should address uncertainties or challenges in the field, seeking to overcome them through research and experimentation.
  2. Achieved innovation or improvement: Your work should aim to develop new products, services, or processes, or enhance existing ones, showcasing innovation or improvement within your industry.
  3. Demonstrated a systematic approach: You should demonstrate that your R&D activities followed a systematic process, involving analysis, experimentation, and evaluation to reach desired outcomes.
  4. Overcome technical challenges: Your project should involve tackling technical hurdles or obstacles, pushing the boundaries of current knowledge or capabilities within your field.

By meeting these criteria, your work may qualify for R&D relief, making you eligible to claim the associated tax benefits.

  • Initiate an initial discussion with you to assess the feasibility of a potential R&D tax credits claim. Our expert team will carefully evaluate your projects, activities, and expenditure to determine if they align with the qualifying criteria set by HMRC. This initial assessment will help us identify if your business is eligible to make a claim and provide you with valuable insights into the potential benefits of pursuing an R&D tax credits application.
  • Offer guidance and advice on the criteria for qualifying R&D projects and what actions are required to meet the eligibility standards. Our experienced team will assess the nature of your activities, ensuring they align with the definition of R&D as set by HMRC. We will provide clear explanations and examples to help you understand the specific elements that make a project eligible for R&D tax credits. With our expertise, we will assist you in identifying the qualifying aspects of your work and provide guidance on any necessary steps to meet the criteria and maximize your chances of a successful R&D tax credits claim.
  • Assist you in preparing a comprehensive Technical Justification document, following the guidelines provided by HMRC. Our expert team will work closely with you to gather all relevant information about your R&D projects, including the technical challenges, uncertainties, and advancements made. We will analyze and articulate the scientific or technological advancements achieved through your research and development activities, ensuring that the document effectively presents the qualifying aspects of your projects. By leveraging our knowledge and expertise, we will guide you in creating a robust Technical Justification document that meets HMRC requirements and strengthens your R&D tax credits claim.

  • Review qualifying expenses and guide what costs would be eligible to be included on the claim.
  • Provide support in the Application for Advanced Assurance if this is your preferred route, to help assure that your claim will be accepted.
  • Include the claim and support documents on the company corporation tax return.
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