Are you looking for some R&D Tax Credit Examples?
R&D tax credit relief is simple in theory.
The UK Government rewards your business innovation efforts by giving you back money for any research and development costs you incur.
Not so fast.
To actually receive money back, your activities need to fit the government’s particular view of R&D.
Your company needs to…
- have a specific R&D project
- that carries out scientific or technological research and development.
- that extends the overall scientific or technological knowledge or capability in your field of business
- that involves an uncertainty that professionals can’t easily resolve and doesn’t have a common solution
The government wants to reward only legitimate and sincere, business-related R&D activities. This is why it’s left the defining guidelines restrictive, but vague.
Many people unfamiliar with the scheme, find it difficult to understand which research and development activities meet these standards.
It may be easier to get a sense of what they’re looking for by taking a look at some real life case studies. Here are some R&D tax credit examples from a few of our clients.
Each one is in a different industry. They pursue innovation in their own way and have faced different challenges.
Case Study One: Social FinTech
Beam is social innovation at its finest. This organisation uses crowdfunding to raise money to assist homeless individuals.
Beam helps them get into secure housing and stable employment. It uses social networking to boost campaigns and uses external partners to demonstrate credibility.
Beam’s social progress is made possible by its ground-breaking technical engineering and R&D.
Even though Beam’s mission is based around social innovation, its work in the social area isn’t applicable for R&D relief.
Social Merit Notwithstanding
Beam can only receive tax credits for the engineering and tech progress that powers it.
Assembling successful R&D credit claims began by shifting the focus from their merit, social impact, and charitable achievements.
R&D relief isn’t based on the social impact or even human value.
HMRC only considers the scientific advances powering any kind of social progress.
Technical Advances Only
Beam has faced several technological uncertainties in building its social organisation.
They needed to incorporate FinTech, security checks, social networking, gamification, and surpass many challenges.
The platform is entirely transparent and maintains updated data on its progress.
Without a set example to follow, Beam had to build its unique model from scratch. Its platform has advanced the fintech capabilities of charitable organisations.
Identifying the Real Driver
We tend to ascribe social progress to better values or improved ways of thinking. But new technological advances are usually hiding behind social leaps.
Analysing these areas often reveals unnoticed scientific achievements.
For example, advances that make business more efficient add on to the bottom line. This surplus can then be passed on to employees through benefits.
Your undercover tech improvements may be eligible for R&D tax credits.
Case Study Two: Eligible Start-Up Activities
This tech start-up was founded to make luxury social experiences more accessible via crowd sharing. It’s a social engagement platform linking users to top event promoters across the world.
This company is focused solely on rapid user acquisition and providing a great experience to its members. Not on pushing the rest of the industry forwards.
But like every good social network, Dynamo uses constant, rapid development to carve out its base.
Dynamo makes a great case study since its mission isn’t technological in nature. It isn’t wooing new customers by showing off its advanced new coding or latest build.
Dynamo’s R&D work is internal, undercover, and done solely to enable its growth. This leaves things a little messy since the research and development advances are scattered throughout its infrastructure.
Companies doing work that involves many progressive iterations, corrections, and adjustments may find it difficult to isolate these activities and quantify the costs.
Uncovering Internal Value
All start-ups are fundamentally research and development based. But companies can’t submit the total cost of operation as a refund claim.
All R&D work still needs to be broken down to the technological progress of individual activities and the associated costs.
Working out unresolved problems or limitations in tech infrastructure qualifies as R&D. Costs related to staffing and software can be claimed.
The UK Government isn’t concerned with the type of business value created by R&D. It’s only interested in hard scientific progress.
Start-ups don’t need to validate their work based on what commercial impact it may have. To claim R&D relief, you only need to show a tech-based advancement.
What are Your Customized Improvements?
Many firms opt for custom development to get around software limitations or resolve system issues. It’s worth investigating whether any outsourced development is eligible for R&D relief.
Case Study Three: Advancing an Industry’s Technological Capabilities
Avvoka is a forward thinking legal group. They use leading edge technologies to deliver a core set of legal services at scale.
Avvoka applies artificial intelligence, automation, data analytics, and no-code technology to document management, contracts, and collaborative negotiation.
They’ve completely disrupted the industry by introducing new technological capabilities within the legal arena.
Avvoka has never operated as a traditional legal services firm. It’s been tech-based and innovative since day one. Avvoka is based on R&D.
Applied Research and Experimental Development
Avvoka has many R&D activities. Most of them can generally be classified as applied research and experimental development.
Recognition Not Guaranteed
Avvoka is an obviously innovative company. The firm seems like a perfect example of what the government wants. They’ve advanced their field, are highly productive, and continue to develop.
Yet, Avvoka was still missing out on R&D relief funds.
The government won’t go out of its way to hand a company cash. In order to receive all eligible support, R&D activities must be neatly organized and presented in specific claims.
The government always wants proof that your R&D activities were legitimate. This means communicating the reason R&D was necessary.
Even though Avvoka is based on innovation, they still needed to sort their tech advances into individual R&D projects, with each demonstrating a valid purpose and clear intent.
Once they did, Avvoka’s claims went through smoothly. They’ve received all the funds submitted.
Your Applied Research
You don’t need to invent new technology or your own AI models to receive R&D tax credits. Adopting leading-edge technology, processes, or procedures is enough to qualify.
Has your company:
- Worked out uncertainties in a production process?
- Tested or analysed a new method for improved output?
- Hired outside consultants to resolve operational issues?
Common business activities like these can qualify for R&D tax credits.
Start your R&D claim today!
At Accountancy Cloud, we aren’t just R&D obsessed. We’re dedicated to startups and SMEs. (Which is why our clients prefer us over the big four accounting firms.) We’ll make things easier, get your claims in faster, and might even find some cash available from previous tax years.Get started
Speak To The Experts
R&D Tax Credits are a vital resource for injecting cash into your business. Over £33.3 billion has been claimed since the program began.
If you want to get as much back as possible, consider having a conversation with the R&D experts about what your options are.
The claims process isn’t intended to be difficult, but like all government procedures, things can get complicated fast.
And if you make a mistake, it can take months to get it resolved.