Manufacturing and engineering projects can qualify for R&D tax credits
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);
- 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.
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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