The information and communication industry is all about keeping everyone worldwide connected, which is achieved through constant scientific and technological advancements. The information and communication sector is very innovative as we have seen it play a very significant part during a pandemic; shifting all the business and education processes online wasn’t easy, but with the help of technological advancement, it was made possible to keep the world moving.
IT and communication involve finding innovative solutions. Therefore, there’s an excellent potential for research and development in this sector. IT and communication companies continuously strive to develop improved processes and enhanced designs to meet high standards. According to the latest statistics, the information and communication industry is second in the number of R and D tax relief claims made. However, not all businesses performing research and development claim R and D tax relief. If your projects are seeking advancement by developing new systems, techniques, software, or methods, then you most likely qualify for R and D tax relief claims. However, most businesses miss out on their reward for innovation because they are not sure about their eligibility and claim process. This blog will explicate what activities in the information and communication sector qualify for the R and D tax relief claim so you don’t miss out on a reward for the risks you undertake to seek technological advancement.
Which IT & Communication Projects Qualify for R and D Tax Relief Claim?
There are many research and development projects the IT and communication sector is involved in, unaware of their eligibility. Some examples of such information and communication projects that may qualify for the R and D tax relief claims are:
- Development of algorithms for data analysis
- Advancing platform functionality
- Integration of various data systems
- AI and virtual reality systems
- Integration of machine learning and augmented reality with other systems
- Development of customised communication network
- Creation of an advanced programming model
- Integration of new systems to improve product performance
- Testing prototypes
- Implementation of new quality assurance processes
- Creating products with enhanced quality and safety of the network
- Integration of new materials to improve manufacturing processes
- Creation of bespoke applications
- Software development
- Cloud computing
- Automating the process of data capturing
What Are The Qualifying Activities in Information & Communication Technology Industry?
According to HMRC guidelines bringing innovation by addressing technical and scientific challenges is termed research and technology. Solutions to such challenges are not readily available, and R&D requires a bespoke methodology and scientific solutions to resolve existing uncertainties. All such activities qualify for the R and D tax relief claim. Examples of such activities from the information and communication sector are:
- Identifying uncertainties
- Technical requirement analysis
- Resolve conflicts within software or hardware
- Creating technical and scientific objectives
- Designing and creating new or improved technologies
- Testing the product or process
- Creation of software to support the R&D project
- Planning and management of R&D projects
- Training to support the R&D project
- Feasibility assessment and analysis of new product or process
Which Activities Do Not Qualify For The R and D Tax Relief Claim?
Activities like UX and UI designs, as these are concerned with aesthetics more than technological advancement, do not qualify for the R and D tax relief claim.
What Are The Qualifying Expenditure For The Claim?
If your company is undertaking qualifying research and development activities, then you are eligible to claim R and D tax relief against your qualifying Research and Development expenditure. Following are the costs which you can claim for:
- Salaries, national insurance and pension of employees directly involved in research and development projects.
- Cost of software bought for research and development purposes.
- 65% of the costs paid for the subcontracted R&D projects.
- Expenditure of fuel, water, power and other utilities
- Cost of material used in the R&D project.
- Cost of testing prototypes for R&D purposes.
- Cost of training required to carry out R&D.
How Can Square Finance Help You?
Square Finance has years of experience in R and D tax relief claims. Our team of R&D specialists help businesses identify their R&D projects to receive maximum R & D tax relief. Over the years, we have helped companies from all sectors in claiming R and D tax relief. Sectors we have supported include manufacturing, health, food and beverages, construction, architecture, trade and retail, software, information and communication. At Square Finance, we use our expertise to deliver maximum R&D incentives to our clients. We enable innovative businesses successfully receive rewards in the form of cash credits or tax reductions within a few days of claim.
How Can You Claim R and D Tax relief?
Our R and D tax relief specialists offer full support throughout the claiming process. We first assess your projects to find qualifying Research and Development activities and then prepare robust R&D claims for you. Claims we tailor for you are fully maximised to ensure maximum reward for your innovative projects. We do the most of the work, from preparing a claim to submitting it on your behalf. Our R&D specialist team also have expertise in dealing with HMRC enquiries adeptly.
So if you are claiming R and D tax relief for the first time or want to maximise your tax relief, contact us, and we’ll manage your claim in the best possible way. If you are undergoing an HMRC enquiry, our enquiry support team will take care of it as well. Contact now.