There is a common misconception in society that “R&D” functions exclusively describe work conducted by scientists in white coats, holding test tubes and wire-wrapped mice.
In reality, R&D is a much broader, less specialized term that refers to any developmental process that has an uncertain roadmap. If your project solves a problem that was not easily solved by an existing product, service or process, you’ve likely conducted activity that qualifies as R&D.
A useful way of looking at R&D is through the lens of “advances”. An advance is defined as being a development that solves a problem that would not be easily deduced by a professional in that field. If, at the beginning of the process, an expert in your field couldn’t have come in, seen the problem and said “this is the solution”, your project likely qualifies as R&D.
Through our experience at Kapitalise, we’ve worked with companies across a wide range of industries with many, many different innovations: from new forms of nail polish to packaging design to apps and software platforms.
So, you’ve conducted your R&D – spending all that money on solving a problem… What’s next?
Well, if you didn’t know already, the British government rewards businesses like yours by giving you credits or cash back for your R&D activity, giving back up to 33% of your project costs, depending on whether your business is profit or loss making. The average claim size in the UK last year was £60,000, meaning you and many other businesses like yours are missing out on some serious savings.
So what do you do?
Well, you take advantage of the scheme, of course! All you need to do is:
Calculate your R&D expenditure:
Look at all your costs relating to your R&D projects, including staff costs and consumables and lay them out in a financial report. Relevant costs within those include salaries (prorated for time spent on R&D work), utility costs (again prorated), and consumables and materials used in your R&D processes.
Create a technical report:
This report sums up your business and presents your innovative projects, the challenges you faced in your project roadmap and how you managed to overcome them.
File your claim and follow up:
After the reports are ready, send them off to HMRC and follow up with them to ensure the claim goes smoothly. In the event of a query, don’t panic! They’re usually quite benign and are down to HMRC requiring a little bit more information. Usually, you’ll have your claim back within 4-6 weeks… although it’s usually much faster!
Well, there you have it. A straightforward way to get the government to chip in on your business’ R&D projects!
Questions about the process? Need a little bit of help? Don’t hesitate to get in touch with us at email@example.com.
We offer a completely free-of-charge consultation, and our highly experienced team would be happy to advise your innovative business on how to reclaim what you’re entitled to as quickly and efficiently as possible.