As a rapidly evolving area of Science & Technology, Software is a key sector that can benefit from R&D Tax Credits. These valuable tax incentives can be claimed by software companies undertaking qualifying research and development as defined in the Department for Business, Energy & Industrial Strategy (BEIS) guidelines.
In simple terms, R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology. The activities that directly contribute to achieving this advance in science or technology through the resolution of scientific or technological uncertainty are R&D. Certain qualifying indirect activities related to the project can also be classed as R&D.
In such a fast-moving sector however, it can be difficult to determine whether an advance or improvement in science and technology that a software company achieves is an advance in the field itself or an advance in the company’s own knowledge or capability alone. This fact is acknowledged by HMRC in its additional guidelines relating to R&D Tax Credits for software companies.
Current HMRC documentation also states that as technological capability has increased over time, projects which were once considered to meet the definition of R&D within the BEIS guidelines may now not qualify. This is because solutions to what were previously technological uncertainties may now be readily available or deducible.
HMRC advises that as the words ‘research and development’ are frequently used in the software sector, care should be taken not to assume that a commercial project fully aligns with the definition of R&D set out in the BEIS Guidelines. In order to be included as a qualifying R&D project for the purposes of R&D Tax Credits, only those parts of the commercial project that meet the criteria described in the BEIS Guidelines will be qualifying.
These additional complexities can make the process of claiming R&D Tax Credits a real quandary for software companies. In order to maximise R&D Tax Credits, those responsible for preparing claims need to have a good understanding of the rules and how to apply them. HMRC are clamping down on companies trying to claim for work which doesn’t qualify even though it usually occurs as a result of misunderstanding.
R&D Funding Group helps software companies overcome these problems by handling the R&D Tax Credits claim work for them. We work with software companies across the UK, allowing them to obtain maximum benefit from the R&D Tax Credits scheme whilst ensuring they only claim for what is permitted.
Does the R&D in Your Software Business Qualify for R&D Tax Credits?
R&D Funding Group can review your software projects and identify which areas are eligible for R&D Tax Credits. As specialists in this field, we accurately prepare claims with sound supporting evidence to obtain maximum benefit for our software clients in line with current guidelines. One of our Directors sits on the HMRC R&D Tax Credits Advisory Panel so you can be assured we are always fully conversant with the latest rules and how to apply them.
Contact us for a free, no-obligation consultation to see how we can help your software company receive its full entitlement from the R&D Tax Credits scheme.
Are You an Accountant Working with Software Sector Clients?
R&D Funding Group also works with accountants across the UK, allowing them to confidently offer specialist R&D Tax Credit services to their clients in the software sector. R&D Tax Credits is a niche area of accountancy and we understand that many accountants don’t have the in-house expertise to handle software company R&D Tax Credits claims. Our focus is purely on R&D Tax Credits so there is no conflict of interest in any other area of your business.
Contact us for a free, no-obligation consultation to see how we could work together to deliver the best return for your software sector clients.