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Top tips for architects when claiming R&D tax credits

We still often see opportunities where architects could build a superior R&D claim. To help those who are familiar with the R&D tax credit scheme but may be uncertain about how to improve their claim, we're sharing our top tips below.

Last updated: 13 November 2020.

1. If you feel uncertain about your claim, get involved, because the responsibility lies with you

You may feel the right thing to do is step back and leave the R&D claim with the professional advisor you’ve hired to process it on your behalf, particularly if you’re uncertain from the outset about what can/should be included. Indeed the boundary for eligible work can often seem unclear and it’s sensible to obtain professional help to identify work that qualifies.

However, when it comes to the claim itself, make sure you work collaboratively with your advisor rather than leaving it all in their hands to manage. Ultimately the claim is the responsibility of your architectural practice. If HMRC has any concerns whether the work qualifies, they’ll direct questions to the architects involved in a project, not your advisor. Would your team feel comfortable explaining the advances and uncertainties of the eligible projects to an Inspector? A good advisor can help your team interpret the eligibility guidelines in terms that apply to an architectural practice, so they’ll be well prepared should HMRC direct their questions their way. This may result in more cash savings. Visit our R&D page to find out more.

2. Review your claim methodology if you claim regularly

Over the years, we’ve seen many claims where a single eligibility value has been applied by the Royal Institute of British Architects (RIBA) phase. Whereas the RIBA phases of a project are very helpful to guide any R&D claim review, it’s unlikely that you can replicate the eligibility pattern within a phase across your working sectors or all of your projects. The content of each claim you submit will differ depending on the particulars of the projects you're claiming for. Therefore you need to adjust the approach to make sure that you don’t miss out on any opportunities as the project unfolds. For example, we see numerous examples in phase 5 where technical challenges have arisen due to regulatory or client changes. This resulted in eligible work carried out. If you apply a blanket approach via RIBA phases, this could result in missing this work from your claim. 

Therefore, we recommend that you review your claim methodology regularly if you claim every year and remain open-minded to refreshing the assessment strategy where you feel it may be deficient. The last thing you want is being unable to justify claiming a project when an Inspector asks a question because you rolled forward too many assumptions in your assessment. 

3. Don’t forget more than just project work may be eligible

You have identified that project work can be claimed, but are your claims purely focused on internal R&D? Far too often we find that the R&D claim doesn’t look beyond this project work. Have you considered claiming for bid work or IT activities? If not, then it’s time for a review. 

4.  Get help with the guidelines if you claim for design process

An architectural practice needs to have a methodology that separates standard design from eligible R&D. As you know distinguishing eligible R&D can be tricky and the R&D guidelines are generic as they need to cover all sectors. So if you decide to include interior design or creative aspects of a project, make sure to have more clarity on how the guidelines will apply in your case to avoid challenges from HMRC. This is an area where we would recommend getting external advice

5. Distinguish between research activities for R&D tax purposes

Your team may need to carry out extensive research in many areas as part of a project. Research doesn’t always qualify and this is why you may become confused by the terminology. For instance, you can’t claim R&D tax credits for researching the architecture language used in a specific location as it isn’t related to a field of science or technology. Another reason you can’t include research work is that the R&D tax scheme specifically excludes all social sciences from being a qualifying area of science. 

However, there are exceptions to the rule. If your research focuses on sustainability then it might be eligible as the work could cross over into analysing the technological solutions. Take time to carefully understand this exclusion and whether your work, such as master planning, is focused on social sciences or whether it has moved into resolving technological challenges. 

Conclusion

Architectural practices are constantly driving innovation by ultimately orchestrating the different elements of a project, therefore you’re in a position to make R&D claims. However, the uncertainty in the sector around what can and can’t be claimed remains at large. To ensure your claim is successful, we feel it’s important that you become more involved in preparing the claim process and you’re given the skills to challenge whether projects should, or shouldn’t, be included. Only by developing a claim process that’s understandable and agreed with your architectural teams can you be certain that a claim is accurate and it isn’t missing any additional activities. 

Speak to an expert

For more information on how to prepare successful R&D tax credit claims and determine which of your projects are eligible, please get in touch below through the form.

About the author

Iain Butler

+44 (0)20 7556 1343
butleri@buzzacott.co.uk
LinkedIn

Last updated: 13 November 2020.

1. If you feel uncertain about your claim, get involved, because the responsibility lies with you

You may feel the right thing to do is step back and leave the R&D claim with the professional advisor you’ve hired to process it on your behalf, particularly if you’re uncertain from the outset about what can/should be included. Indeed the boundary for eligible work can often seem unclear and it’s sensible to obtain professional help to identify work that qualifies.

However, when it comes to the claim itself, make sure you work collaboratively with your advisor rather than leaving it all in their hands to manage. Ultimately the claim is the responsibility of your architectural practice. If HMRC has any concerns whether the work qualifies, they’ll direct questions to the architects involved in a project, not your advisor. Would your team feel comfortable explaining the advances and uncertainties of the eligible projects to an Inspector? A good advisor can help your team interpret the eligibility guidelines in terms that apply to an architectural practice, so they’ll be well prepared should HMRC direct their questions their way. This may result in more cash savings. Visit our R&D page to find out more.

2. Review your claim methodology if you claim regularly

Over the years, we’ve seen many claims where a single eligibility value has been applied by the Royal Institute of British Architects (RIBA) phase. Whereas the RIBA phases of a project are very helpful to guide any R&D claim review, it’s unlikely that you can replicate the eligibility pattern within a phase across your working sectors or all of your projects. The content of each claim you submit will differ depending on the particulars of the projects you're claiming for. Therefore you need to adjust the approach to make sure that you don’t miss out on any opportunities as the project unfolds. For example, we see numerous examples in phase 5 where technical challenges have arisen due to regulatory or client changes. This resulted in eligible work carried out. If you apply a blanket approach via RIBA phases, this could result in missing this work from your claim. 

Therefore, we recommend that you review your claim methodology regularly if you claim every year and remain open-minded to refreshing the assessment strategy where you feel it may be deficient. The last thing you want is being unable to justify claiming a project when an Inspector asks a question because you rolled forward too many assumptions in your assessment. 

3. Don’t forget more than just project work may be eligible

You have identified that project work can be claimed, but are your claims purely focused on internal R&D? Far too often we find that the R&D claim doesn’t look beyond this project work. Have you considered claiming for bid work or IT activities? If not, then it’s time for a review. 

4.  Get help with the guidelines if you claim for design process

An architectural practice needs to have a methodology that separates standard design from eligible R&D. As you know distinguishing eligible R&D can be tricky and the R&D guidelines are generic as they need to cover all sectors. So if you decide to include interior design or creative aspects of a project, make sure to have more clarity on how the guidelines will apply in your case to avoid challenges from HMRC. This is an area where we would recommend getting external advice

5. Distinguish between research activities for R&D tax purposes

Your team may need to carry out extensive research in many areas as part of a project. Research doesn’t always qualify and this is why you may become confused by the terminology. For instance, you can’t claim R&D tax credits for researching the architecture language used in a specific location as it isn’t related to a field of science or technology. Another reason you can’t include research work is that the R&D tax scheme specifically excludes all social sciences from being a qualifying area of science. 

However, there are exceptions to the rule. If your research focuses on sustainability then it might be eligible as the work could cross over into analysing the technological solutions. Take time to carefully understand this exclusion and whether your work, such as master planning, is focused on social sciences or whether it has moved into resolving technological challenges. 

Conclusion

Architectural practices are constantly driving innovation by ultimately orchestrating the different elements of a project, therefore you’re in a position to make R&D claims. However, the uncertainty in the sector around what can and can’t be claimed remains at large. To ensure your claim is successful, we feel it’s important that you become more involved in preparing the claim process and you’re given the skills to challenge whether projects should, or shouldn’t, be included. Only by developing a claim process that’s understandable and agreed with your architectural teams can you be certain that a claim is accurate and it isn’t missing any additional activities. 

Speak to an expert

For more information on how to prepare successful R&D tax credit claims and determine which of your projects are eligible, please get in touch below through the form.

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You might also be interested in… Event overview: R&D tax credits for architects

At our latest breakfast roundtable for architects, there were attendees from larger practices looking for guidance on how to improve their claims and others from smaller firms who had heard of R&D tax credits but were unsure which of their projects were eligible. 

As a start, I provided some background information on the innovation incentives available to architects. Those practices that were unfamiliar with the scheme wanted to know more about what was involved in the claims process so we discussed the documentation required, which accounting periods could be claimed and the benefits R&D tax credits provide. We also discussed what size a practice needs to be in order to benefit from the tax relief. This highlighted that the scheme is not just for larger firms but also identified how projects funded by a third party can be claimed under the large company scheme. 

Determining what architectural projects are eligible

Attendees gained further understanding of which of their projects are eligible for R&D tax credits as we discussed the application of new materials, new construction methods and solar thermal cladding. This was put into perspective as a larger practice shared their own experience and highlighted projects that they had successfully claimed for in the past. 

There was uncertainty around how to claim projects undertaken for the benefit of the practice rather than focused on one specific building and a number of questions arose around claiming Building Information Modelling (BIM). Many firms have a specialist who develops scripts and libraries to support the use of BIM technology so we discussed how the claim would need to separate routine support activities from development of tools when making the claim and how these two different activities might be claimable under the scheme.  

Keeping HMRC on side

HMRC are looking to make changes that will decrease the length of documents they review in support of R&D tax credits. This will help to reduce the time it takes to create the documentation in support of a claim but is not yet confirmed so we also highlighted the current project coverage requirements. As a recommendation, we suggested that the attendees follow the HMRC online form as a basis, but work with an experienced advisor in order to include the relevant information and submit claims efficiently and successfully. 

I concluded the session by sharing the secrets to positive interaction with HMRC and provided some solutions to the common challenges architects face when claiming R&D tax credits. It was a thoroughly enjoyable morning and I am looking forward to working with these architects in the future. 

Interested in attending our next event?

If you would like to attend our next roundtable or if you’re an architect yourself and have any questions around R&D tax credits please get in touch below by submitting the form.

About the author

Iain Butler

+44 (0)20 7556 1343
butleri@buzzacott.co.uk
LinkedIn

At our latest breakfast roundtable for architects, there were attendees from larger practices looking for guidance on how to improve their claims and others from smaller firms who had heard of R&D tax credits but were unsure which of their projects were eligible. 

As a start, I provided some background information on the innovation incentives available to architects. Those practices that were unfamiliar with the scheme wanted to know more about what was involved in the claims process so we discussed the documentation required, which accounting periods could be claimed and the benefits R&D tax credits provide. We also discussed what size a practice needs to be in order to benefit from the tax relief. This highlighted that the scheme is not just for larger firms but also identified how projects funded by a third party can be claimed under the large company scheme. 

Determining what architectural projects are eligible

Attendees gained further understanding of which of their projects are eligible for R&D tax credits as we discussed the application of new materials, new construction methods and solar thermal cladding. This was put into perspective as a larger practice shared their own experience and highlighted projects that they had successfully claimed for in the past. 

There was uncertainty around how to claim projects undertaken for the benefit of the practice rather than focused on one specific building and a number of questions arose around claiming Building Information Modelling (BIM). Many firms have a specialist who develops scripts and libraries to support the use of BIM technology so we discussed how the claim would need to separate routine support activities from development of tools when making the claim and how these two different activities might be claimable under the scheme.  

Keeping HMRC on side

HMRC are looking to make changes that will decrease the length of documents they review in support of R&D tax credits. This will help to reduce the time it takes to create the documentation in support of a claim but is not yet confirmed so we also highlighted the current project coverage requirements. As a recommendation, we suggested that the attendees follow the HMRC online form as a basis, but work with an experienced advisor in order to include the relevant information and submit claims efficiently and successfully. 

I concluded the session by sharing the secrets to positive interaction with HMRC and provided some solutions to the common challenges architects face when claiming R&D tax credits. It was a thoroughly enjoyable morning and I am looking forward to working with these architects in the future. 

Interested in attending our next event?

If you would like to attend our next roundtable or if you’re an architect yourself and have any questions around R&D tax credits please get in touch below by submitting the form.

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