Helping businesses secure and maximise R&D tax credits and grants

Is my software project eligible for 33% cost recovery through the HMRC R&D tax credits scheme?

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Is my software development project eligible for R&D tax credits?

Thousands of businesses – large, medium and small – have already received generous R&D tax credits directly from HMRC. LOSS MAKING businesses receive back up to 33% of their R&D spend whilst PROFIT MAKING businesses receive up to 26%.

Let me ask you this very simple question – ‘At the start of the project, did you face any ‘HEAD SCRATCHING’ moments due to technical uncertainties?”

I am usually amazed at what follows next – My clients generally respond with “We are facing technical challenges and project uncertainties on a daily basis” and then proceed to tell me about their ‘head scratching’ moments.

On many occasions, I visit clients to discover that they consider resolving technical issues as part of their day to day job and were unaware that their work actually qualified for R&D tax credits.

What software development projects quality for R&D tax credits?

A software project would need to encounter technological uncertainties, the resolutions of which could not be readily resolved by a competent professional working elsewhere in the field. A successful outcome of a project would also need to lead to an overall advancement in technology.

It is virtually impossible to list all eligible software projects, however the below list will give you a flavour of what typically qualifies for R&D tax credits:

  • state-of-the-art software for new projects, or new functionality for existing R&D projects;
  • tools to extend the functionality of application software programs or of an operating system;
  • extensions to database software, programming languages, or operating systems;
  • software development tools, such as tools to port data across platforms, for image processing or character recognition;
  • novel data management techniques, such as new object representations and new data structures;
  • innovative methods of capturing, transmitting, manipulating, and protecting data;
  • software to run new computer hardware;
  • software to run on devices with pre-installed operating systems, such as handheld GPS, mobile phones, and tablets;
  • means of integrating hardware and software platforms.

This is just a list of example eligible projects and many other software projects would also qualify for R&D tax credits. Each software project will need to be reviewed on its own merits and this will include undertaking a comparison between industry capability at the beginning of the project and that sought by the project.

Find out more about R&D tax credits and Myriad’s industry-leading approach and claiming process.

This post was written by Barrie Dowsett who is the CEO of Myriad Associates and a qualified Chartered Management Accountant. Barrie has over 20 years experience in senior Finance Director positions and has been responsible for making R&D tax credits claims going back to 2001.

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