The science behind R&D tax relief

CLAIMING R&D tax relief isn’t exactly rocket science is it? Sorry to disappoint you, but yes it is actually.

More and more companies are exploring the potential of R&D tax relief to claim what’s rightfully theirs, but there’s a right way and a wrong way to go about it. To realise this potential and at the same time avoid one of the associated pitfalls, you need to be able to distinguish between eligible and non-eligible R&D activity.

A clear explanation of eligibility could make the difference between HMRC accepting or rejecting a claim. A claim for R&D tax relief isn’t just a case of pulling together the financials. No, to ensure the best possible claim is made, a technical approach is an absolute must.

Trial and error or R&D?

Is trial and error considered as R&D (eligible or ineligible)? If you think of trial and error as experimentation using routine methods, THEN when it’s used to remove unknowns that precede R&D it’s ineligible, BUT if it’s used to resolve technical uncertainties that form part of R&D then it is eligible.

My brain’s hurting, so it must be R&D

A common mistake when preparing an R&D tax relief claim is to make the assumption that, because something sounds complicated, it automatically counts as eligible R&D. Often, processes that sound very difficult to a lay person are in fact routine to a competent professional.

Uncertain or unknown?

One thing HMRC is clear about is that companies must be trying to achieve their goals by resolving ‘technological uncertainties’ within specific projects. Technical unknowns on their own don’t count as eligible R&D, which only kicks in when technical uncertainties arise. The distinction between the two essentially comes down to whether or not a problem can be readily resolved by a competent professional. If it can, then it isn’t a technological uncertainty. R&D only begins when conventional knowledge has been applied and exhausted, without a resolution to the problem.

Scientific knowledge is key

Sometimes it’s clear that a company is carrying out research and development; but understanding which projects are eligible for R&D tax relief is the tricky bit. HMRC’s CIRD guidelines define R&D for tax purposes as “a project that seeks to achieve an advance in science or technology”. If you don’t have an understanding of science, how can you possibly hope to appreciate what constitutes an advance? And it’s not enough to have a grasp on the work of just one company; the advance needs to be made over the whole field of science.

Get it right and you have the beginnings of a potentially successful claim. Get it wrong, as a lot of people do, and you could end up with an HMRC investigation on your hands. No wonder companies find applying for R&D tax relief on their own quite so daunting and confusing.

Speak to Jumpstart

We are the UK’s leading R&D tax relief claims specialists. Our technology-based approach to claim preparation is undertaken by PhD qualified Analysts with extensive industry experience in their own specific fields of science or technology. Our Technical Analysts are not only industry sector experts, but equally knowledgeable when it comes to HMRC’s legislation, ensuring maximised, accurate and robust claims.

In a climate where the value of claims being disputed by HMRC has grown by almost 400% over a twelve-month period, the fact that we offer free enquiry defence as standard on every claim we prepare and submit gives our clients a cast-iron security.

To arrange a free consultation to discuss your own R&D tax relief specific circumstances, to identify how we can work with your team to improve the claim process and realise greater value for your business, contact the Ian Donaldson on 07527 635787 or email