What qualifies as R&D in software development?
As software plays an increasingly important role across all industries, successful claims are not limited to just creating new products. While the scope of qualifying activities is intentionally broad, understanding whether your project qualifies can be tricky and many businesses miss out on significant savings. These are some examples of the range of activities that can qualify:
- Applying algorithms onto real hardware and enabling scalable processing speed
- Creating end-to-end SaaS systems where developing and unifying key modules is uncertain
- Developing ETL (Extract, Transform, Load) capability for complex data
- Developing high performing modelling or simulation tools
- Extending software frameworks (e.g. software development kits, or software libraries) beyond their original design
- Integrating disparate technologies
- Migrating complex data from an on-premise deployment to a cloud instance
- Replacing existing technology with a new architecture (i.e. moving to micro-services)
HMRC pay particular attention to the speed at which software evolves and uses its own computer specialists to assess claims. At the moment, we're seeing a large number of software claims being challenged in HMRC’s compliance checks. HMRC is using the argument that a lot of technological developments, such as AI and Machine Learning, use known technologies. Therefore, you need to ensure your claim is keeping up with changes and still meets the needs of HMRC. It’s always worth having a conversation with one of our advisers to understand how your software project fits within the R&D legislation.
We take time to listen to your business to understand the goal you’re trying to achieve with your innovation, so we can help you overcome problems and challenges along the way. By being open and honest, we aren’t afraid to challenge our clients to make sure that your claim is correct, and you’ve optimised the benefit. In case of an enquiry, our expert advisers have experience dealing with HMRC to help you navigate the changing R&D rules and protect you from an HMRC enquiry. Our highly qualified team will work with you to prepare your R&D claim. We want to help you understand your eligible activities, without holding you up, so you know how to build a robust R&D claim.