R&D Tax Credits: What Does "Technological Or Scientific Uncertainty" Actually Mean?
With the R&D Tax Credits scheme, companies have a unique chance to fund their groundbreaking projects by offsetting R&D spending. However, HMRC maintains stringent criteria for what qualifies as research and development – something that may prove difficult to navigate without expert assistance.
Companies of all sizes can benefit from R&D Tax Credits if they’re taking a risk and pushing the boundaries to innovate. From developing a new or improved product, service or process through to attempting to solve an unsolved problem, any expenditure that qualifies as Research & Development might result in eligibility for tax credits – regardless of whether the project succeeds or fails. Taking advantage of this advantageous scheme is essential for staying ahead in today's business landscape.
It’s the “scientific or technological uncertainty” where people come unstuck
Understanding the HMRC's definition of eligible R&D, which requires that scientific or technological advances must benefit wider fields rather than just a single company, can be daunting for many businesses.
With highly specialised projects and inexperienced claimants in particular feeling overwhelmed, it is often advantageous to speak with R&D tax credit experts before starting an official claim. R&D tax credits experts provide you with guidance on your project so you feel confident in achieving success through Research & Development tax reliefs!
The formal definition of a scientific or technological uncertainty
An important point to note is that the uncertainty must be directly related science or technology. So a business, commercial or functional challenge would not count as a technological or scientific uncertainty in this context.
According to government guidelines:
"Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field.”
Additionally, the knowledge or information must not already be available in the public domain. Again, our team are happy to discuss this with you and how it relates to your project where required.
The clarity test
When assessing if you have a valid R&D Tax Credits claim, ask yourself the “clarity” test. Can your competitors easily replicate what has been achieved? Or is it an outcome that would not be obvious to them? This means, if your R&D project has made an advancement in science or tech that a competitor could easily replicate (assuming they had the same resources) then a valid R&D Tax Credits claim is unlikely.
Remember, this program incentivises innovation and progress - so make sure there's truly something new & innovative in the mix!
An example: Software development
During the course of an R&D project, the development of a specific piece of software or algorithm may be required to get the job done. However it may not be obvious from the outset whether this new piece of software can actually be created, or whether it will even meet the business requirement. This in turn may necessitate technical or scientific advancement (not simply an off-the-shelf solution) and this too could attract R&D Tax Credits.
How R&D Tax Credits relate to software can again be a bit of a minefield, which is why we go into it in specific detail on the Software page of the Myriad Associates website.
Describing the scientific/technical challenges in your technical report
As part of an R&D Tax Credits claim you will need to compile a high quality technical report. Typically, this report explains the features and challenges of your R&D project in more detail, describing to HMRC inspectors exactly what you faced and why you believe your project is eligible.
Accurately and concisely explaining the scientific and/or technical hurdles you encountered is central here and could mean the difference between success and failure. We recommend making your technical around two to five pages of A4, to include up to three projects.
We recently put together our How To Prepare A Technical Report For An R&D Tax Credits Claim article which explains everything in more detail.
Getting to the crux of a technical report, indeed conveying a technical or scientific uncertainty in general, is hard. It’s common knowledge that R&D Tax Credit applications are tough and going it alone is strongly discouraged - this is what makes the Tax Cloud so popular.
Why should I use the Tax Cloud portal for my R&D Tax Credits claim?
Leading R&D tax consultancy, Myriad Associates has pioneered the revolutionary Tax Cloud portal, released in 2017. This inventive creation was the result of extensive research and development from our specialist team.
Boasting a highly accomplished team of R&D professionals, Myriad Associates is well-versed in the field of research and development funding. Our expertise allows us to expertly guide clients through tax relief processes - avoiding common mistakes along the way. We are proud to boast an exemplary success rate; with engagement resulting in successful outcomes for our trusted clients. Tax Cloud provides reliable access creating paths towards potential reward: trust us as your gateway into achieving R&D tax credit successes efficiently and cost effectively! (it’s less expensive than other options too).
Take advantage of Tax Cloud's seamless online system to file your R&D tax credits claim. With access at all times, you can easily take control without needing any additional support - or fuss! Our cloud-based platform provides an easy step-by-step process from start to finish, with our experienced team available every step of the way for even more peace of mind. Get started today and begin maximising the potential rewards on offer!
- Submitting R&D tax claims since 2001
- Strong track record spanning 20+ years delivering R&D tax credit claims
- Over £70m claimed and counting
- Industry leading specialists
- We employ technical, costing and tax experts and tax experts
- Confident of delivering value to our clients, we offer our R&D tax services on a success fee-only basis.
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