These factors are the key areas to focus on when claiming R&D tax credits, but due to the wide variety of work this encompasses, it can be difficult for architects to navigate the scheme and some of the less obvious aspects of projects are often missed out of claims.
In order to support you with preparing maximised R&D tax credit claims for increased benefit to your practice, we’ve highlighted four of these commonly missed areas below.
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As an architect, you’ve most likely experienced a time where, during a project, the client realises that they need to reduce costs and find savings to complete it. You therefore need to find an alternative finish or try to achieve the same look utilising cheaper materials. Although this may feel like a negative at first, this can quite often be the start of an eligible project when it comes to R&D tax credits. It can be difficult to establish whether the work involved with value engineering is eligible for the scheme, so we recommend seeking advice before preparing a claim.
Changes in regulation
There have been many regulatory changes in recent years that seek to make buildings safer and more energy efficient. For those planned changes, which architects can factor into their designs, there may be an element of eligible R&D involved when finding alternatives that meet the new requirements. Other changes, which are in response to problems or incidents with existing buildings, can be more difficult to deal with when design requirements change mid-project.
If you are required to revise the design within the approved building envelope to align with revised regulations this may require extensive research of materials and products to try and seek a feasible solution. This work could be eligible. Equally, if the regulation requirements are unclear within the building type being designed, you’re likely to be undertaking eligible R&D to understand the impacts of any regulatory framework.
Many of your projects will take into account external drivers such as environmental conditions that impact the thermal, acoustics and wind loading of the building. If these drivers have an element of technological uncertainty, they can be eligible for R&D tax credits. For example, if there are uncertainties related to the environment where the product will be used, such as the longevity of the finish or weather penetration at interface in the development façade, this work could be eligible.
However, if the environmental conditions around the development were challenging for materials handling, or the delivery from the supply chain, the solution sought may be complex but would not necessarily be technically difficult to achieve and therefore not likely to be eligible for R&D tax credits. Constraints derived from the building environment (such as sunlight, noise or prevailing wind direction) causing technical challenges within the building design are often indicators that you’ve had to overcome technical challenges.
If you required the development of a new modelling software to be able to implement the design objectives within a project, this could potentially include eligible R&D. While your aim could be to achieve an aesthetic aspect, the creation of technology to be able to achieve it, such as having to develop or re-adapt a piece of software, is indicative of R&D taking place.
If you are using standard software, then the set-up is not likely to be eligible in itself. However, if the software is used in order to achieve the aesthetic finish within an eligible project, the set up time could be directly contributing to the resolution of technological uncertainties. Therefore, when preparing a claim it is worthwhile reviewing which support teams are assisting your architects to undertake the eligible work.
The fine line between eligible and non-eligible work causes considerable confusion for architects when preparing an R&D tax credits claim. We recommend that you carefully examine each project undertaken rather making high-level assumptions and seek advice on complex projects to ensure that you’re preparing maximised claims, but are also aligned with the HMRC guidelines to avoid enquiry.