In today’s world, AI and robotics are revolutionising every industry, playing a crucial role in advancing various aspects of design and development processes. With advancements in AI and robotics, computers can not only imitate human capabilities but go beyond human expertise, effectively analysing and contextualising large datasets and creating automatic outputs. By managing such complex operations, AI and robotics now don’t even require human interference to perform most functions, constantly evolving industries and bringing advancement in all fields. In this process of advancement, they are undertaking many projects that qualify for R&D tax credits. This blog will provide a closer look into AI and robotics industry to identify prevalent projects and activities that qualify for R&D tax credits.
HMRC R&D Tax Credits
HMRC R&D tax credits are a government incentive that allows companies to claim the expenditure they have spent on research and development activities. The eligibility of the R&D tax credits scheme is very broad; it is open for all the domains that are undertaking research and development to develop new products or services or improve existing ones.
Eligibility for R&D Tax Credits
There is no specified classification for AI and robotics, but if they meet the definition set by HMRC regardless of their sector or size, they are likely to qualify for the HMRC R&D tax credits scheme. Most projects in Artificial Intelligence and Robotics meet the criteria of R&D; you need to check the following criteria to apply for credits or tax relief:
1. Based in the UK
Your company must be based in the UK, and your projects must be carried out in the UK to qualify for the HMRC R&D tax credits. However, there is the exception that your workers can travel abroad to undertake some part of a project that cannot be completed in the UK due to some geographic or scientific reasons.
2. Developing New or Improved Component
To qualify for R&D, your qualifying project must involve the creation of something new or improved. It can be just a small business component to increase your business performance, reduce time, reduce development cost or enhance quality or reliability.
3. Involve Research
Another mandatory term that classifies a project as R&D is that it must involve research or, in simple words, it should be technical in nature.
4. Scientific or Technical Uncertainty
To qualify for HMRC R&D tax credits, you must demonstrate which scientific or technical uncertainties you face in your project and how you have attempted to eliminate those uncertainties to develop a new or improved product or service.
Technical projects involve experimentation, i.e. designing, simulation, systematic trial, and evaluation of alternatives to achieve the desired product.
R&D Tax Credits in Artificial Intelligence and Robotics
Now if we view this eligibility criterion, we can conclude that most projects in artificial intelligence (AI) and robotics fit perfectly into the definition of R&D set by HMRC. Some of such qualifying examples from AI and Robotics are:
- Software development
- Enhancing process efficiency
- Testing new materials to create optimum use of the artificial intelligence
- Data analytics
- Analysis of large datasets
- Advancements in cloud computing
- Advancement in cyber security to deal with threats
- AI voice recognition
- Advertisements utilising artificial intelligence
- Fraud detection using AI spotting anomalies in data sets
- Testing the use of language processing and machine learning
- Evaluating cognitive robotics to enable productivity or efficiency
- Evaluating sight or sound recognition
- Improving the production of robots to lower cost or system engineering
- Testing human collaboration
- Improving artificial intelligence in vehicles to extend their battery life
- Inventing new mechatronic systems
- Testing human-robot collaborations to achieve efficiency
- Testing the application of artificial intelligence in robot controllers
These are just a few examples of qualifying projects from various areas of artificial intelligence or robotics; eligible activities vary from company to company, so you must evaluate and identify your projects accordingly. If you still feel underconfident about it, then the best way to make the most of the HMRC R&D tax credits scheme is by taking assistance from experienced R&D tax credits specialists.
We at Square Finance take pride in helping numerous companies from every domain in claiming HMRC R&D tax credits by identifying every hidden qualifying activity, tailoring robust claims, and handling their claim adeptly on their behalf. If you want to claim with our seamless process, get in touch now!