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Identifying eligible clients in Farming and Agriculture

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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!

To kick this off, we’re looking at agriculture and farming. These are industries where most people wouldn’t expect to find cutting-edge R&D, and to some extent they’re right – the majority of farms aren’t doing qualifying work. However, if you know what to look for, this can be a rich seam to mine.

What to avoid

Having said that, it’s worth taking the time to think about what a non-eligible farming or agriculture business looks like. Farming and agriculture businesses that produce food using established techniques, without any attempt to improve through technical or scientific means, are definitely out!

Beyond this, it gets a little more difficult. A lots of crop farmers, for example, buy in new seeds from their supplier and have to spend time optimising the types and levels of irrigation and fertilisation to maximise their crop yields. Although this type of work can be difficult and expensive, it’s unlikely to be eligible because any knowledge gained would be a company-specific rather than industry-wide advance in science or technology. The same goes for the introduction of new technology, such as crop-inspection drones. Using off-the-shelf technology for the purpose for which it is designed does not qualify as eligible work. 

Ok, so what should I look for?

So, now that we know what ineligible farming work looks like, what areas should you be focussing on?

Collaborative projects

Developers of new agricultural technology will often partner with larger agricultural organisations to gain knowledge and enable more rigorous testing. If you know that your agricultural client is working on collaborative projects with technology companies, they’re likely to have an eligible claim, and are definitely worth targeting!

Larger Companies or Co-operatives

As we’ve established, smaller individual farms are less unlikely to be carrying out eligible work. However, as the farming companies get bigger, or form part of co-operatives, you’re far more likely to find eligible work. For example, these types of organisations will often have the skills and funding necessary to embark on in-house breeding programmes, or develop technologically advanced processing techniques and machinery, that would constitute an industry-wide advance. 

Environmental Improvements

Hot topics in farming at the moment centre around environmental sustainability, such as improvements in disease and pest control, increased water efficiency, improved soil management and working to meet new regulatory requirements. Farming clients working in these areas are more likely to have qualifying work, as long as they are seeking to advance the industry as a whole. 

Supply Chain Companies

Saving the best for last, our top tip when looking for R&D in farming and agricultural is to focus on the supply chain to the industry. Whether it’s makers of agricultural machinery, plant and animal breeders or even producers of medications and supplements for livestock, these companies are far more likely to be doing cutting-edge, eligible R&D than individual farms. For example, we stated above that introducing drone technology to a farm would not be eligible for R&D tax relief, which is true. However, developing improved drones, or writing advanced software programmes to enable the assessment of crop health and yield from the air would absolutely involve eligible R&D. 

How to write an R&D tax relief technical narrative

With HMRC’s new mandatory requirement for project descriptions on all submissions, we wanted to share our experiences to help others to write their best possible technical narratives.

Available to download here.

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