Manufacturing and engineering

Manufacturing and engineering projects can qualify for R&D tax credits

Engineering and manufacturing projects

Typically those product and engineering or manufacturing process development projects that may qualify for research and development (R&D) tax relief include the following items:

  • Innovative product development using computer aided design tools;
  • Development of second generation or improved products;
  • Tooling and equipment fixture design and development;
  • Development of unique computer numerical control programmes;
  • Design of innovative programmable logic controllers;
  • Design of innovative manufacturing equipment;
  • Prototype development and three-dimensional solid modelling;
  • Development of computer models;
  • Design and development of cost-effective and innovative operational processes;
  • Integration of new materials to improve product performance and manufacturing processes;
  • Evaluation and determination of the most efficient flow of material;
  • Design and evaluation of process alternatives;
  • Design, construction, and testing of product prototypes;
  • Increase in ease of operation or suitability of manufactured products;
  • Development of processes that would meet new or changed regulatory requirements; or,
  • Streamlining of manufacturing processes through automation.

Activities that can be included in an R&D Tax Credit claim

In terms of qualifying a claim, the following activities would be considered eligible for inclusion in a claim for R&D tax credits:

  • Definition of technical objectives;
  • Identification of uncertainties;
  • Feasibility studies;
  • Review of new and competing technologies;
  • Formulation of project objectives;
  • Analysis, design and development of the technology/science;
  • Production of technical specifications or other documents to explain and support the R&D project and advancement;
  • Testing of the product, process or software;
  • Planning and management of project(s);
  • Monitoring and evaluation of outputs.

In addition, certain support activities may qualify for inclusion in the claim for R&D tax relief, such as:

  • Administration, finance, and human resource (HR) support services specifically essential to undertaking the defined R&D activities;
  • Learning and development (L&D) activities needed to support the R&D.

R&D expenditure claimable for manufacturing and engineering projects

Claims for relief can include on costs that have been funded from the Profit & Loss account.  In certain circumstances claims can include capitalised expenditure (providing that the assets purchased have been classified as Intangible Assets).  The main expenses that can be claimed are:

  • Staff costs (gross pay, employer’s NIC, employer’s pension contributions, and reimbursed expenses relating to R&D activities);
  • Agency workers (externally provided workers);
  • Subcontractors/freelancers;
  • Software license costs; and,
  • Consumable items (heat, light and power, and materials and equipment used in or transformed by the R&D process).

Staff costs that can be included in an R&D Tax Claim

It is not uncommon for an R&D team to consist of many managers and operatives from various parts of the business.  The R&D project team may include board level directors, the R&D Manager, Manufacturing staff, a Lead Developer, Engineering staff, Project Managers, Co-ordinators, Quality Control and Testing specialists, Operatives, and Cost Accountants, as well as members of the management support teams e.g. HR and L&D.

Evidence based technical report

By profiting from our specialist knowledge and significant Board level experience, our clients can be sure of maximising their R&D tax relief claim.  Amolo Group advisors identify, define and describe R&D tax relief claims that are several times higher than those claims prepared in-house or by generalist accountants. We produce evidence based company reports to support claims.

Why clients choose Amolo Group to advise them

  • No work starts until the client has formally engaged us in writing.
  • Our advisors adhere to the Code of Conduct and Practice of the Chartered Management Institute.
  • We appoint a supervising project manager to oversee the claim process and to liaise with the client on all aspects of the claim.
  • We appoint technical/industry specialists to the team that will process the claim.
  • We advise on all aspects of the R&D claim, from start to finish.
  • We make sure that HMRC will understand the details of the projects identified.
  • We adopt a right-first-time approach.
  • We can maximise R&D claims because our specialist advisors are able to identify, define and describe qualifying projects, and all eligible expenses.
  • Our advisors undertake literature searches of peer reviewed papers and work to a research methodology in order to validate the claims.
  • We produce detailed evidence based technical reports that clearly describe the projects. The inclusion of technical reports is essential in support of claims.
  • We prefer to work with the client’s own accountants to quantify and file the final claim.
  • No claim is submitted until the client signs of the technical report and the claim.
  • Our Claim Process is transparent and ensures that we are accountable. So every client always know where we are with their claim.
  • Our fees are payable only if the claim to HMRC for R&D tax credits is successful.

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