The usual starting point for R&D is that you have a problem that you need to solve: leading you to look at your current set-up, and what’s available outside the company to overcome the problem.
If it looks like there’s no solution you could start your own project to find the solution: but it must be something innovative, new and not currently available.
There are specific terms you need to comply with to qualify for R&D Tax Credits such as proving your business is trying to ‘resolve scientific or technological uncertainties’. The industries that qualify are also pretty broad – you can view a check list here.
A little side note to keep in mind.. the work might be for yourself, or a client but could still qualify if you meet the terms.
When does the R&D work start and end?
Your first step is to identify that there’s no available solution by doing your research, your next step is to then start your own R&D project: this is the official start. Any costs before this point won’t be covered in the claim.
The end is when you finish the project: whether that then solves the issue, or proves it can’t be solved doesn’t matter for the claim (although it will to you) – it could still qualify as R&D.
What type of projects don’t qualify?
It’s very unique to each claim, as every business works in a different way: but typically anything that’s a copy of an existing set up or already available (and you’ve just not done enough research will not qualify.
There are some things that you can claim for that aren’t always obvious and could add a good amount to the claim value so do your research or use an experienced accountancy firm to do the claim.