What often happens is that out of a fear of over-claiming, owing to a lack of specialist knowledge, some companies are advised their activities aren't eligible.
1. You can't claim for a project if it has failed. FALSE
Companies often believe - mistakenly - that is their development work hasn't been successful or has failed to achieve its originally intended goal then the money spent cannot be reclaimed. In fact, failure is often a strong indicator of R&D tax relief scheme eligibility. Technical difficulty, waste and the use of groundbreaking techniques are all signs of eligibility under the scheme and can form a significant part of an R&D claim.
2. Configuring an existing IT package constitutes R&D. FALSE
Unfortunately, bolting together systems that can already be found on the market, however intricate and tailored they may be, doesn't qualify as R&D under the legislation. Only IT projects that break new ground or truly advance the science of computing are eligible under the scheme. HMRC legislation in this area can be quite involved, so again it pays to talk to specialists in the field.
3. You can't claim for R&D work undertaken by a subcontractor. FALSE
Under the current legislation, product development that's outsourced to subcontractors or partners can be claimed for within your own R&D tax claim, but only depending on your company size. This can be of particular interest to smaller companies for whom partnering and pooling resources is crucial. Subcontracting is a very complicated area, best talk to an expert to maximise potential returns...
4. R&D tax relief only applies to work done by people in white lab coats. FALSE
Qualifying R&D activity goes way beyond that. In addition to pure science-based research and development costs (scientists' salaries, laboratory costs etc), supporting activity such as engineering or IT improvements are sometimes also eligible.
5. Making a claim is resource and time intensive. FALSE
The fact-finding part of the process can be surprisingly quick. R&D tax relief specialists who know what they're looking for can be in and out of an organisation in a matter of hours.
Jumpstart has a proven track record in making successful R&D tax relief claims. They know what to do, how to claim and, perhaps most importantly of all, the many pitfalls to avoid.
