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Three Essential Tips for Claiming R&D Tax Relief for Natural Sciences Projects

GrantTree R&D Technical Consultant Dr. Oliver Gould, PhD shares three tips for claiming R&D Tax Relief on development work conducted in the natural sciences field.

The UK’s natural sciences sector is teeming with innovation. From synthetic biology to cutting-edge agriculture, decarbonisation to genetic therapies, this vibrant field has the potential to unleash advancements that will significantly benefit society and the economy.

Much of the work that goes into creating these technologies is eligible for R&D Tax Relief, a government incentive rewarding companies for investment in research and development work. Through this scheme, companies can recoup up to 27p per £1 they invest in staff, raw materials, and other eligible costs incurred during R&D. 

Development work related to natural sciences space often meets R&D Tax Relief’s complex eligibility criteria. However, companies in this sector often struggle to identify and structure projects they can claim for. This can result in companies failing to claim their full allowance of relief and raising doubts at HMRC that their work qualifies for the scheme, potentially leading to an enquiry

To help you overcome this obstacle, I have shared three key tips you should follow when preparing your next R&D Tax claim. If you need help with your next claim, and avoiding HMRC’s compliance crackdown, just get in touch. My colleagues and I in GrantTree’s R&D Tax Relief team are here to help. 

Tip 1: Failed projects are also eligible

Often, I will speak to companies about their development work, and they will neglect to mention an eligible project because, as it failed, they assume it doesn’t qualify.

This is not true. Your project doesn’t need to succeed to qualify for R&D Tax Relief. 

To quote government guidance:

“Not all projects succeed in their aims. What counts is whether there is an intention to achieve an advance in science or technology, not whether ultimately the associated scientific or technological uncertainty is completely resolved, or resolved to the degree intended.”

In fact, failure can help you prove that you encountered scientific or technological uncertainty, an essential ingredient in qualifying work.

So, when you are considering which projects to claim for, ask yourself (as I would ask my clients) whether there are any projects you’ve had to abandon because they were too difficult. The work you performed to reach that decision may well qualify for R&D Tax Relief. 

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Tip 2: Don’t ignore the underlying research

Many natural sciences companies are working on customer-facing solutions which leverage cutting-edge research to deliver value. 

Companies often assume that the eligible R&D is tied up in the building of the solution. However, oftentimes, the eligible work is contained in the research underpinning the solution. 

Here’s an example. Let’s say you were building an app to help detect the early signs of a neurodegenerative disease like Parkinson’s. Let’s also say that, in developing this solution, you conducted research which uncovered new disease markers previously unknown to science. 

In this case, the qualifying costs are more likely to be associated with the study than with the creation of a platform that employs its findings. 

Remember, a qualifying project is one that seeks an advance in technology or scientific knowledge. It’s possible the work designed to seek this advance took place outside or at least before the hard graft of building a solution from scratch began.

Case Study

Read how GrantTree helped natural sciences innovator Tumblebug secure a substantial R&D Tax Credit to fund its circular solution for organic waste.

Tip 3: Structure your projects based on your goals

Another issue natural sciences businesses often encounter is how to package their development work into one or more qualifying projects.

This issue stems from the fact that companies and the government have different definitions of R&D projects. Companies think of projects as work designed to realise a specific business outcome: the delivery of a new app, say. Whereas the government defines a project, for R&D Tax purposes, as a collection of activities undertaken to overcome scientific and technological uncertainties in pursuit of a specific scientific or technological advance.

This is the key thing to remember: When it comes to R&D Tax Relief, development work forms part of the same project if it is conducted to achieve the same advance. That is the yardstick you need to use when compiling your project list. 

Thanks to this understandable confusion, I will regularly work with companies to split what they see as a single project into multiple projects because they were, in fact, seeking multiple scientific or technological advances. Likewise, I will have to combine work from what a client sees as independent streams into a single eligible project.

Let GrantTree’s experts prepare your next claim

I hope you found these tips for claiming R&D Tax Relief for natural sciences projects useful.

Predictable as it may be, the best piece of advice I have for making sure your company is compliantly claiming its full allowance is to work with an R&D Tax specialist like GrantTree.

Our tax and technical experts can make ensure you are only claiming for eligible project work and that all associated qualifying costs are included in your submission. We’ll also make sure your claim reflects the raft of reforms the government has implemented over the last 18 months

For help with your upcoming claim, just get in touch.