Something we hear time and again from our clients is that they struggle to identify clients in their client base who would be eligible to claim R&D tax relief. So, in this blog series, we’ll be digging into some less obvious sectors and discussing what to look for when assessing eligibility!
In the latest of this series, we’re looking at Architectural Practices. As with our previous subjects, the level of eligible R&D to be found in this area is misunderstood, and very often overestimated. However, if you know what you’re looking for this can be a good area to look for eligible clients.
What to avoid
As with our previous subjects, it’s worth taking the time to first think about the types of Architectural practices that don’t do any eligible work. As with other service-based companies, most of the core work done by Architectural practices is not eligible for R&D tax relief. This includes day-to-day design of standard constructions, where the knowledge of how to build these structures exists and is well documented. These activities don’t require advancements in science or technology and are therefore not eligible.
Beyond this, practices that focus solely on the aesthetic and art-based side of architecture are less likely to be doing eligible work. The drawing and design of structures without reference to, for example, the engineering challenges inherent in building them, would not require the practices to make advances in science or technology.
Ok, so what should I look for?
So, now that we know what ineligible architectural R&D work looks like, what areas should you be focussing on?
Buildings account for a large proportion of energy consumption in most developed nations, so architects are under huge amounts of pressure to design and build energy-efficient buildings. This can require advances to be made in materials science, for example in the design and use of more solar efficient glass for office blocks. Reducing water use can require the use of optics, engineering and chemistry to design advanced water filtration and reuse systems. In all of these areas multi-disciplinary Architectural Practices can be required to resolve technical uncertainties to ensure that structures meet stringent environmental targets and regulations.
Development of software tools
Following on from work done on analytics and big data, Architectural practices sometimes carry out qualifying work in the area of software development. The development of new software tools to enable, for example, Virtual Reality technology to be integrated into a design process would be eligible for R&D tax relief, as long as it requires advances to be made in software science.
Development of software tools related to Business Information Modelling (BIM) can also require advances to be made in Big Data, data modelling and 3D modelling, making it eligible for R&D tax relief.
The use of prefabricated components in construction is becoming more common, due to the cost and time savings as well as the reduction in waste and energy consumption. Although the use of off-the-shelf prefabricated components would not constitute eligible R&D, the design and development of the components themselves could, if it required advances to be made in technology.
A common use for prefabricated components is in building cladding, enabling certain aesthetic effects and/or environmental requirements to be met. Again, while the use of these components would not necessarily involve any eligible R&D, the design of new cladding and cladding installation systems can be a rich seam to tap.
SME scheme or RDEC?
When analysing the work done by your Architectural Practice clients, it’s worth taking the time to think about how they structure their work, and which elements of the work can routed through which R&D tax scheme. These Practices are often contracted by their clients to do R&D on their client’s behalf, and the costs of these projects would have to be claimed through the RDEC scheme. Some of the types of work discussed above are done in-house on the practices’s own behalf and can be claimed through the SME scheme, but much of it is not and it pays to be careful about separating out the two streams!
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