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By victoria Taylor

Businesses of all sizes have greatly benefitted from the R&D tax relief scheme to improve their cash flow and enhance the quality of their services and products. R&D tax relief is available to businesses of all domains seeking scientific and technological innovation. In addition, the UK government reduces the tax liability of companies carrying out qualifying research and development activities without any minimum limit on R&D expenditure, making R&D claims more lucrative for every business.

Today SMEs and large businesses are involved in cloud computing and data sciences for various applications. Cloud technologies have revolutionised the world of IT in many ways. It greatly reduces the cost of managing IT systems, adding scalability, efficiency, and flexibility to the business and enhancing services and products. Cloud technologies revolve around research, experiments, advancement in technology and innovation. The Covid-19 pandemic unveiled the importance of data and cloud computing more than ever, and it acted as a core technology to shift everything online. According to evidence

2021 witnessed many changes in R&D claims, one of them was the expansion of the qualifying expenditure for R&D tax relief claims. In the Autumn budget of 2021, HMRC decided to include all the expenditures related to cloud computing and data sciences in the R&D claims. The Chancellor clarified the purpose of R&D tax relief, announcing reforms that support modern research and advancement in science and technology. These reforms not only aim to boost innovation in IT sectors directly it also intends to bring improvement in modern manufacturing, which relies on data sciences. In this blog, we’ll help companies understand new reforms and their impact on the businesses so the companies investing in cloud technologies and data sciences can benefit from R&D claims.

Understanding Data and Cloud Computing

Data analysis and storage is the biggest challenge for any organisation, and cloud computing plays a huge role in resolving this challenge of dealing with big data securely and economically. Data sciences and cloud computing are correlated as data sciences involve the analysis of various types of data stored in a cloud. Over the years, cloud technologies have gained popularity enabling a convenient way to access a shared pool of computing resources like databases, software, artificial intelligence, servers etc. However, small and medium-sized companies usually cannot afford servers to keep their data secure and handle large data volumes; that’s where cloud computing comes in. Cloud computing is vital to simplify data analysis and management without any stress of getting servers. Therefore Data as a Service (DaaS) is quite popular these days for providing data storage, processing, analysis and integration services using network connections. It also helps companies automate their tasks, understand target audiences and produce improved products. And all this revolves around research and innovation, therefore comes under the category of R&D.

R&D Tax Relief & Data and Cloud Computing

Cloud computing is all about innovation, whether we see it from an IT perspective, using it to enhance productivity or as a business innovation platform. It is closely linked with providing services via the internet to a large target audience in every field, whether online banking. Shopping, entertainment, education or healthcare sector.

After recent amendments in the qualifying criteria of R&D claims, now, while claiming your R&D project, you can maximise the value of your claim by including data analysis and cloud computing expenditure in your claim. HMRC now allows you to claim R&D tax relief against all the costs associated with cloud resources and services for data storage and analysis. This change allows small and large businesses to cover data-driven research for the new or improved products and services in the R&D claims. This will encourage the IT sector to invest more in innovation and benefit from R&D tax relief. So companies engaged in cloud-based innovation are eligible to receive R&D tax relief for their qualifying R&D work.

What Else Can You Claim For?

As per HMRC guidelines, any business engaged in bringing innovation in science and technology to deliver improved services or products is an eligible candidate to receive a reduction in companies’ liable corporation tax. Eligible companies can make their R&D claims against defined R&D expenditure which includes:

  • Salaries, wages and pension fund expenditure of staff actively involved in the R&D project
  • Wages of support staff such as maintenance, clerical or administrative staff.
  • Cost of direct and indirect externally provided staff engaged in the R&D project
  • Consumables expenditure
  • Cost of creation of prototypes and clinical trials
  • Expenditure of purchasing software license required for carrying out an R&D project

Note: Costs of production and distribution of goods, land, patents, trademarks and capital expenditure do not qualify for the R&D claims.

 

How Can You Claim R&D Tax Relief?

Square Finance is a team of competent accountants and R&D tax relief specialists who can help you receive relief for your qualifying projects. All you have to do is contact our R&D experts and let us know about what you do, and we will use our field knowledge and insights to find eligible projects. Our industry experience and expertise enable us to analyse your projects and find all the qualifying costs to produce a robust claim. To ensure an accurate representation of what you do, we will send your technical narrative to you for review and make changes if required.

We ensure your claim is according to the HMRC guidelines to save you from HMRC scrutiny; therefore, our claims are rarely scrutinised by HMRC. Even if you face an enquiry, there’s nothing to worry about. Our R&D enquiry support team will adeptly handle enquiry on your behalf, securing your R&D claims.

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