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What Counts as an "Advance" for R&D Tax Relief?

The concept of an "advance in science or technology" sits at the heart of R&D tax claims. It’s one of the core criteria for a valid claim, alongside genuine scientific or technological uncertainty.

Many companies assume their projects don't count because they didn't result in groundbreaking innovations or commercial success. But here's where it gets interesting: HMRC's definition of an "advance" might surprise you.

Recent compliance checks have shown that HMRC pays particularly close attention to whether your technical narrative genuinely demonstrates an improvement on the existing baseline of knowledge in your field. So, making sure that your advance is on solid ground is crucial to avoid a lengthy process of defending your claim.

HMRC’s Definition: "Advance in Science or Technology”

HMRC defines an advance as:

“…an advance in overall knowledge or capability in a field of science or technology (not a company’s own state of knowledge or capability alone). This includes the adaptation of knowledge or capability from another field of science or technology in order to make such an advance where this adaptation was not readily deducible.”

There are other qualifications to this definition that elaborate on this, which you can find in HMRC’s guidelines.

In plain English, an advance in science or technology means you're pushing the boundaries of what's currently known or understood in your field.

Think of it this way: if you could find the solution or ask a consultant in the field to give you the answer, it's probably not an advance. But if you're venturing into uncharted territory, where the outcome is genuinely uncertain, you're likely on the right track.

Both new and improvements to existing processes, products and services can qualify, as long as there's real uncertainty involved. Crucially, you need to have sought to develop new knowledge or capabilities.

HMRC’s definition is broad, allowing for it to be applied to any field of science or technology. R&D tax claim eligibility in the UK is at once broad and specific, requiring you to prove your project meets the letter of the legislation but also allowing you to claim for a great variety of projects in many fields.

Types of Advances That May Qualify For R&D Tax Credits

There are a number of types of advance that may qualify for R&D tax relief, but all of them need to be clearly defined and outlined in your Additional Information Form, which is why it’s important to get it right. Your AIF is how HMRC validates that your R&D project qualifies and/or whether they want to investigate further, so it’s crucial to understand if your project is eligible.

1. Achieved Advances

These are your success stories; these are projects where you actually cracked the code and created a solution to a technical problem.

This is what most companies think of when it comes to R&D: picking a problem, researching existing methods to overcome it, finding none and developing their own, then commercialising the solution to great success, resulting in industry-wide applause and awards.

The success of a project commercially is irrelevant (although nice to have). However, experimenting to find a new solution in the field and creating new methods in the field is essential to qualifying under the UK’s R&D tax relief scheme.

This includes “appreciable improvements” that change the scientific or technological characteristics of something for the better.

Example: A manufacturing team spent six months developing a new quality control process that uses machine learning to predict defects before they occur. The process reduced defects by 40% and required solving genuine uncertainties around pattern recognition in a specific production environment.

This counts as an advance because they created new knowledge in the field of AI by developing a new model with an improved rate of pattern recognition.

2. Unsuccessful Attempts

You’re staring at a stack of project files from the past year. There's the AI chatbot that never quite worked as intended, the manufacturing process that took months to perfect, and that sustainability initiative that seemed promising but hit a technical wall.

Projects that didn't work out can still qualify. They sometimes these represent your biggest R&D investments and often are the strongest projects to justify with technical documentation, considering how the difficulty overcoming the uncertainties is pretty obvious.

The key principle is simple: you were genuinely attempting to achieve an advance, and the effort you spent resolving (or trying to resolve) the scientific or technological uncertainty is what matters, not the final outcome.

Example: A team spent 18 months trying to develop a new type of lightweight, waterproof fabric that could withstand submersion at 5,000 metres. Despite extensive research and testing, the final product only achieved waterproofing to 2,000 metres before the project was shelved.

The technical challenges tackled (understanding polymer behaviour under extreme pressure, developing new coating techniques) all represent genuine R&D activity, even though they didn't hit their target.

3. Advances Already Achieved Elsewhere (But Not Publicly Available)

This one catches many businesses off guard. Just because a competitor has developed a similar solution doesn't automatically disqualify your project, so long as theirs isn't publicly available and you're working from your own technical baseline. The crucial element here is that your team is still tackling genuine uncertainty without access to the solution.

However, you'll need to demonstrate that you conducted thorough research to ensure the solution wasn't already in the public domain. This means having a robust scientific or technological baseline that shows you understood what was already known before you started, ideally with clear examples of the research undertaken.

Example: A company is aware that three major competitors have developed more efficient battery management systems for electric vehicles, but none have published their methods.

Its engineering team spends two years developing its own approach, solving technical challenges around thermal management and charge optimisation. As long as they can show they researched existing knowledge, this counts as a qualifying advance.

Projects That Don’t Qualify For R&D Tax Credits

Let's be clear about what falls outside the scope of qualifying advances:

• Installing or adapting existing, well-understood technology for your specific use case, even if it requires some customisation
• Using established tools and methods with minor adjustments (think standard software configurations or routine process modifications)
• Updates that don't involve technical uncertainty, like changing user interfaces or simple reconfigurations
• Improvements in business processes, marketing strategies, or social sciences don't qualify (though the technology behind them might)

The litmus test? If a competent professional in your field could reasonably be expected to achieve the same result using readily available knowledge and standard practices, it's probably not an advance.

Bringing It Back to Your Business

Think about your recent projects through this lens. Were there initiatives that:

• Broke new ground in your industry? Even small breakthroughs count if they involved genuine technical uncertainty
• Required extensive trial and error? That's often a strong indicator of R&D activity, as you were working through problems without clear solutions
• Got stuck in R&D limbo before being abandoned? These "failed" projects might represent some of your most valuable R&D claims

Here's the reassuring truth: those efforts you might dismiss as "just part of doing business" often represent legitimate R&D activities that HMRC recognises.

The project that consumed six months of your senior developer's time wrestling with integration challenges? The manufacturing process improvement that took countless iterations to get right? The sustainability initiative that hit technical roadblocks and got shelved? These all have value for your R&D claim.

Remember, it's not about the commercial success of your projects; it's about the technical journey you took to get there.

How to Strengthen Your R&D Claim

The R&D tax relief scheme is designed to support scientific and technical exploration and innovation, regardless of the final outcome.

Ready to uncover the hidden value in your projects? Get in touch for a free consultation with the Tax Cloud team today. We'll help you identify those overlooked opportunities and ensure you're not leaving money on the table.

Tax Cloud is the UK’s first (and best) R&D tax credit portal, designed to let you complete your R&D tax credit claim at your own pace and in your own words while being supported by technical writers and R&D tax professionals. You end up with a robust claim, prepared to the standards of a full consultancy service at a fraction of the cost.