We made it – we’ve slogged our way through ‘quite a year’, and 2021 is finally here – hooray! And yet we’re still in lockdown, schools are closed and companies are struggling, so the light at the end of the tunnel is still a long way off. We know that our customers went above and beyond throughout 2020 to support their corporate clients, making sure that they accessed any and all appropriate sources of funding, including R&D tax relief, and are now looking to do the same in 2021.
To help with this, here’s our guide on where to look for eligible R&D in your client base this year.
The COVID-19 crisis and its associated difficulties—from the total shutdown of many industries to the challenges of homeworking—has led to a huge number of companies pivoting their business models, products, delivery methods or in fact every aspect of their business. Where these pivots have required an advance to be made in science or technology, it’s likely that the company will be eligible to claim R&D tax relief.
For example, a huge number of software companies have moved to the cloud or developed new online tools to support remote businesses. Where this requires advances to be made in computer science, there’s a claim! Other examples include manufacturing companies developing new and improved PPE, and distilleries finding more effective ways to make hand sanitiser. As long as there’s an advance, there’s a claim!
Trends in Technology
Alongside the huge amounts on innovation driven by COVID-19, the world of technology continues to grow and change. Companies working on the introduction of 5G networks to not just consumer electronics but also the manufacturing industry will doubtless be carrying out huge amounts of R&D into how best to harness and exploit the potential introduced by increased data transfer speeds.
AI continues to be both a meaningless buzzword and a key area of development in a whole range of industries, from insurance companies looking to improve their risk assessments to medical imaging companies producing devices to predict how well a wound will heal.
Cybersecurity and authentication will also become more and more important in a more remote world, with the need to have secure access to sensitive company data for dispersed workforces causing more than a few problems for software development companies.
Alongside these newer trends and pressures, huge numbers of companies continue to carry out R&D in response to changes in their industry and the wider world. From making products more environmentally friendly and reducing carbon footprints to the development of alternatives to fossil fuels, environmental issues continue to motivate companies across all sectors to carry out eligible R&D.
Cultural changes are also playing their part. Over the past few years, for example, the demand for vegan food products has skyrocketed, bringing with it a huge number of R&D tax relief claims for food manufacturing companies.
Of course, having said all of this, we know that our users will have many clients who are doing eligible R&D in less cutting-edge areas. We always advise looking at the following when trying to find eligible R&D in your client base:
- Look at the sector they’re operating in – is it likely to involve science or technology?
- Does the company employ technical staff?
- Does the company have R&D costs stated on their accounts?
- Have the company’s project costs gone up, or have they experienced major cost overruns?
- Has the company been awarded any grants or patents?
Keeping these questions in mind when considering their client base should help accountants and advisors identify as many eligible clients and R&D projects as possible.
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