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 a new blog series, we’ll be digging into some less obvious sectors and discussing what to look for when assessing eligibility!
In the next part of this series, we’re looking at the care sector, and more specifically, care homes. In a change from our previous subjects, this is an area in which you’re very unlikely to find eligible R&D. In this blog we’ll attempt to explain why this is, and highlight the few areas that are worth focussing on with your care home clients.
What to avoid
As with our previous subjects, it’s good to start out with an understanding of the types of care homes that don’t do any eligible work. In this sector, unfortunately, the answer to this is most of them!
The main thing to avoid here is small entities, usually single or small groups of care homes. At this scale, it’s highly unlikely that there will be any eligible work going on, mostly because there’s nothing technical or scientific about the core business, and no urgent need to make scientific or technical advances to improve their services.
Moving up the scale, larger care home groups are likely to undertake regular, large projects to improve their facilities and service offering. However, these are often focused on commercial or logistical innovations, and again wouldn’t require the company to make scientific or technical advances.
At this point, you’re probably wondering if it’s worth thinking about your care home clients at all in the context of R&D, and you’d be right – you’re unlikely to find anything. That said, there are a few narrow areas it might be worth looking at. You’ll probably also have seen or heard about care homes that have made ‘successful’ R&D tax claims, so we’ll address some of the types of things that they are claiming for.
As we discussed previously, recipe development and food production at the small commercial kitchen scale is unlikely to be eligible—there’s just little scope to be making any kind of advance in food science. This applies even where care home residents have complex nutritional needs—it’s highly unlikely that individual homes will be doing more than designing bespoke menus for residents, which doesn’t require any advance to be made in food or nutritional science.
Even at the larger scale, it’s unlikely that larger groups of care homes will have any eligibility in this area, unless they have a central food production facility. If this facility undertook in-depth research into, for example, increasing the caloric density of common foods or increasing the shelf-life of ready-meals, and this work represented an advance to the food production industry as a whole, there might be scope for making a claim for R&D tax relief.
Quite often, when discussing the projects undertaken in Care homes, the projects are entirely logistical in nature. This can range from menu planning, as discussed above, to developing exercise timetables, or rearranging rooms and activities to reduce contact between residents during infectious disease breakouts. Whilst all of these projects can be complicated and expensive, they would not qualify for R&D tax relief – they simply do not require advances to be made in science or technology.
Software development projects
Within the Care sector, the use of advanced software systems to track residents’ needs and preferences, or to manage staff rotas is becoming more and more common. The implementation and optimisation of these systems is time-consuming and occasionally very difficult, but, like the logistical projects discussed above, will not qualify for R&D tax relief as no advance is being made in technology.
In some cases, companies within the care sector will require bespoke software to be built for particular functions. For these companies to be able to claim for this type of work, they’ll have had to arrange it in one of two ways:
The first option is to have hired in-house software developers who are able to build the required software and identify where the advances and technical uncertainties lie. This would lead to a robust and straightforward claim for the care sector company.
The second, and more common option, is that the care sector company subcontracts the development work to a third-party software developer. In this situation, the care sector company would only be able to claim if they know upfront that their work requires advances to be made in software science, and the contract is explicit about this need for R&D.
As with a lot of the less eligible sectors we’ve discussed, the supply chain to the care industry is far more likely to yield eligible claims than the industry itself. For example, developers of tracking software that enables care home workers to know the whereabouts and condition of their residents in real time point are likely to be making advances in software science, and food manufacturers producing goods at a large scale to supply into care homes could be advancing food science.
Overall, for us the care sector is a ‘no, but’ industry when it comes to R&D tax relief, so it pays to know what you’re looking for in this sea of ineligible companies.
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