A recent First-tier Tribunal case involving Beer Express Ltd serves as a timely reminder that, in today’s R&D tax relief environment, how a claim is prepared can be just as important as the work being claimed.
The company sought R&D tax relief for a number of projects, one of these was a new beer recipe, the others were various software and IT projects.. However, HMRC challenged the claims and the Tribunal ultimately sided with HMRC, resulting in the relief being denied.
While every case turns on its own facts, the decision reinforces several themes in the R&D tax landscape.
Strong Claims Need Strong Evidence
One of the key issues highlighted by the Tribunal was the lack of clear evidence demonstrating how the projects met the requirements for R&D tax relief.
The BEIS Guidelines (Guidelines on the meaning of Research for Tax Purposes) define an advance in science or technology 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).”
The existing knowledge or capability within a particular field is described as the “technological baseline”. A well-constructed R&D claim establishes the baseline first and then goes on to explain the advance and associated technological uncertainties in relation to this baseline.
As HMRC continues to scrutinise claims more closely, businesses need to ensure they can clearly demonstrate not only what they did, but why it qualifies.
Experience Matters
Many businesses undertake innovative work every day, but identifying qualifying R&D requires specialist knowledge and a robust process.
At Robson Laidler, we’ve been advising businesses on R&D tax relief for many years. Our approach focuses on understanding the reality of the projects being undertaken, speaking directly with the technical teams involved and building claims supported by clear, contemporaneous evidence.
We don’t believe in generic reports or one-size-fits-all solutions. Every claim is prepared with the expectation that it may be reviewed, challenged or questioned.
The R&D Landscape Has Changed
The days of submitting claims with minimal supporting information are long gone.
With increased HMRC compliance activity, businesses need advisers who understand both the technical requirements of the legislation and the practical realities of innovation within growing businesses.
Whether you’re developing software, improving processes, creating new products or investing in technology, obtaining the right advice at the outset can make a significant difference.
Thinking About Making an R&D Claim?
Our R&D team has supported businesses across a wide range of sectors and have successfully navigated multiple changes to the R&D regime over the years.
If you’d like to discuss a current project, review an existing claim or gain a second opinion on work already undertaken, we’d be happy to help.
Contact Robson Laidler’s Tax Team today via wanttoknowmore@robson-laidler.co.uk for a no-obligation discussion and discover how our experience can help you claim with confidence.
This article is for general information only and does not constitute advice. Please do not take or refrain from action based on its contents. Information is based on our understanding of legislation at the date of publish and may change in future.