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R&D Tax – What Can You Claim?

Things are changing with the R&D Tax Incentive

The changes are focused on the information that you must provide as part of the application. The information needed is stringent, and there is a renewed focus on confirming that you can provide detailed information on the new knowledge (innovation) you are seeking to create, your hypothesis for the new knowledge, and what experiments will be conducted to prove your hypothesis.

What else is changing?

While the above change will be a little more onerous for those that have not previously had to prepare this information, luckily, it’s not actually hard to get your records in order, particularly if you are using a templated system (we have a complete set you can take a look at here).

Apart from this, nothing else has changed, with one exception.

We expect that the number of audits triggered based on inadequate documentation will increase substantially. But, again, if you have all the right systems and documents in place, creating them as you go, then you don’t need to worry. 

Increasing the amount you can claim

Our experience shows that most organisations are light on when it comes to documentation and evidence to support the maximum claim amount. However, once they align their processes and documentation, we see, on average, an increase between 30-50% in the total claim amount. When the work is documented correctly, the full potential of eligible activity is captured in the claim!

What can you claim?

  1. Any activity that is related to investigating something “no one” knows the answer to when developing a process, system, product or device. You must show what research you have done to show that the knowledge does not already exist in the world.

  2. Your R&D needs to be planned, documented, and broken down into your core activities. The work supporting this core activity, such as planning and documenting, can also be claimed.

    As an example, both core and supporting activities you can claim:

    • The time spent formulating a Hypothesis on how the New Knowledge can be determined

    • The experiments to prove or disprove your hypothesis

    • Updating the hypothesis and doing experiments repeatedly until you have the outcome you are looking for.

If you haven’t taken the time to grab our quick R&D Tax Incentive Checklist, why not do it now and see exactly what the documentation framework looks like.

You might also be interested in our complete set of templates available for download and further support if you wanted help to implement or check how you are applying the templates to your work.

If you would like to talk more about templates, audits, or your R&D program implementation, feel free to book a 10min meeting.

We also run a regular 
R&D Discussion Group where you can learn more from both us and other companies leveraging the R&D Tax Incentive and are looking to make the process and implementation as slick as possible.

Other resources

We have several other resources that may be of interest.

6 Step R&D Tax Incentive Audit Survival eBook
Orphaned Legacy Software Rescue and Maintenance eBook
Take R&D Tax Records Self Assessment, Receive a Free Report
Learn more: R&D Tax Incentive Compliance Requirements

Please take a look at our other free resources on the Softlogic Solutions website.

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