Claiming R&D in Construction Projects

“It’s just what we do”

“Problem solving is part of our job”

“We’re not a research and development company”

Despite the fact that many construction firms spend vast amounts of time and resources developing solutions for better, smarter, stronger, greener and more cost-effective designs and structures, it’s often the view that innovation is just ‘another day at the office’.

But here at R&D Tax North West, we say, “why should our industrious UK construction companies leave their well deserved credit with the taxman when they could claim for Research and Development (R&D) tax relief?”

Could Your Construction Activity be Eligible for R&D Tax Credits?

It’s true that the construction industry is a multifaceted entity, just a brief look at any Building Information Modelling plan will show you the level of detail and variety of disciplines involved to produce a structure from inception to construction.

So within this complex web of designs and plans, where does research and development fit; and more importantly, does it fit within your company allowing you to claim R&D tax credits? 

So first let’s consider the projects you have worked (are working) on. What evidence is there that you can claim R&D tax relief?

Criteria for Claiming R&D Tax Credits in Construction:

First of all; have you met a significant challenge in the project?

A challenge that would require that your business identify a solution or advance where there is no clear technological or scientific solution? Is there more than one potential solution? Are you unsure if the project will achieve the required outcome?

If you’ve answered yes, then this may mean that research and development is required in finding a solution. This may involve taking a risk; investing in your own resources and time to research the problem and test solutions.

A good indication that you are working on research and development is that you’ve needed specialist skills to understand an issue that hasn’t previously been resolved.  Or perhaps you are improving an existing product or process but are unsure of the outcome without appropriate testing. Some examples of this could be research in:

 

  • Developing a tailor-made solution to reduce waste and improve the environment
  • A new methodology that produces structures more economically
  • Processes for effective off-site assembly and transportation
  • Creating better efficiencies with plumbing or electrical designs
  • Innovative solutions to help a structure withstand a particular element, such as flooding, fire, earthquakes or unstable ground.
  • New ways to build in areas with restricted space
  • Developing new equipment, tools and products
  • Design of a new scaffolding, or roof system

 

The list goes on, yet many new innovative solutions remain unclaimed.

Check it in the Small Print

Love them or hate them, there is one thing that abounds in the construction industry and that’s contracts.

However, when it comes to R&D, contracts may be the key to identifying if you are eligible to claim.

For example, a contract with significant performance guarantees or indemnity clauses may point to the idea that the project holds many technological uncertainties . This could suggest that R&D may be required to overcome these uncertainties.

To claim R&D tax credits, your business would normally need to hold the rights to the solution and results of the research conducted (i.e. work to find a solution was done at your risk and wasn’t funded by your client or customer).

As we all know contracts aren’t always so straightforward, and at times contractors and consultants may be able to claim – depending on who created the designs or processes, why the work was done and who took the risk.

Deciding exactly who can make the claim for R&D tax credits can be quite involved as it depends not only on the nature of the contract but also whether the companies involved are SMEs or Large Companies, part of a larger group or some combination.

As a rule, it is generally considered that if you develop new innovations, engineering designs and processes in-house, then you are more likely to be eligible to claim R&D tax relief, even if the outcome of the research was deemed unsuccessful. Thankfully, the expert team at R&D Tax North West are able to analyse contracts and provide professional advice on your eligibility for R&D tax relief.

So whether your part in construction lies in architecture, engineering, information technology, manufacturing, landscape or general contracting – there is a chance that research taking place (even spread across different roles of your organisation) could be eligible for R&D Tax credits.

However if you don’t ask – you’ll never know. So contact R&D Tax North West today to determine your potential for R&D Tax relief now and for future activities.

Website Development? Think R&D Tax!

There’s no need for modesty here; you are accomplished in your trade and your business comes highly recommended.

 

You have the experience and the knowledge that supports you to bring a wide range of projects to completion successfully, from basic to complex with ease.

But tell me, what would be your strategy if you were suddenly faced with a project with an entirely new challenge; a project that surprised you with issues that require a completely innovative solution previously not attempted by your workforce?

Would you immediately admit defeat, cancel the project and save yourself any additional expense involved with investigating a solution?

Well, consider how one Web Development company decided to step up to the challenge using research and development (R&D) tax credits.

Supporting Innovation with Research and Development

If I was to ask you which industry sectors can claim for research and development from the UK government, your first thoughts may not turn to website development.

Yet many businesses in various industries are eligible for research and development tax relief, such as one inspiring Web Development company that R&D Tax North West supported to claim R&D Tax Credits for their dedication to researching a new technological approach.

Solving a New Challenge in Website Development

Faced with a unique challenge to their expertise, the Web Development company were presented with an original website that required an innovative restructure. The purpose of the website was to provide an online resource and match vetted service providers to customers within a certain region.

The website owners had, however, adjusted their business plan so that they now required the online service to be extended not just regionally, but nationally.

With the original website already relied upon by many users and bringing in steady revenue from advertising, a request was made by the owners to restructure the entire backroom function without losing site traffic, database information and advertising revenue which was critical to the website owners.

With a complex problem at hand, the Web Developers identified that they would have to:

  • Adapt the existing site to accommodate over 80 counties
  • Integrate Legacy Visual Basic and .Net framework coding in with the current coding languages
  • Incorporate multiple location based access
  • Develop a solution which could automatically and seamlessly incorporate, categorise and publish single copy, advertiser and user input, as well as provide instantaneous access to other products.
  • Deliver all requirements without replacing the entire legacy systems, which would create substantial costs to the website owner.

Not a job for the faint hearted.

Braving the Unknown with R&D

As it was not known in the industry if the existing systems could be modified accurately enough to achieve the changes required, the Web Developers needed to conduct thorough research, tests and trials. This research would not only ascertain if the modifications were achievable… but if it was also a cost-effective, reliable process that could set the standard for future restructures.

Noting the significant uncertainties faced, the Web Developers sought support from other equally experienced website designers on a consultancy basis.

Months and months of research and development led the team to investigate the technological challenges of delivering the required functionality, sometimes meeting dead ends and other times progressing with viable solutions. However, following a thorough investigation and testing innovative and diverse options it became clear that they could only deliver a fraction of the requirements using a modified system approach.

Did the 2 years of attempting algorithms, developing code and using considerable resources without an improved web solution end in disaster for the Web Developers?

Even though the Web Developers had to acknowledge that their research and development did not achieve the outcome that was originally desired, their resources were not wasted.

Overall they had proven that at this time and due to significant technological challenges in modifying the current system, the business goals of the website owner (or any other business requiring the same approach) could not be achieved.

And importantly, by taking the risk of researching previously unexplored processes, and attempting to seek an advance in technology, R&D Tax North West were able to support the Web Developers in claiming R&D Tax Credits; ensuring that this forward-thinking, innovative company could continue to explore new processes without running into financial difficulties.

Have You Attempted the Something Similar?

When it comes to R&D, even failed outcomes can be successes.

If you’ve conducted research and development and your project fails to achieve an advance, it’s not too late; you could qualify for R&D tax credits and support the UK in furthering innovation.

So whether you’re in web design, or any other sector seeking to make an improvement in science or technology; don’t write off your hard work or avoid research because of the costs – contact R&D Tax North West and discover new growth for your business developments.

Claiming R&D Tax Credits: What You Need to Know

It’s a great incentive from the UK government; conduct research and development activities within your business and you’ll benefit from a reduced tax bill or a cash repayment. In return, the UK benefits from an increase of innovation, investments and a stronger economy.

A great plan if your business consists mainly of laboratories, scientists and the latest technological capabilities, right? Well, not entirely.

You may be surprised to learn that even though you wouldn’t class the purpose of your business as ‘research and development,’ a project you may be working on actually could qualify for R&D tax credits. Let’s look at some reasons why…

Who Can Claim R&D Tax Credits?

To qualify for R&D tax credits, a project must seek to make an advance in science or technology, but before you immediately dismiss any hope of claiming, you need to first consider what an advance really means.

For instance, as a smart business owner it’s highly likely you look for ways to reduce costs, make better use of your resources and improve efficiency. So you may work on developing processes that support your business to increase manufacturing capability, produce less waste or speed up development and design times.

Whether these new processes apply to development of a new product or improvement of an existing product or process, the same rule applies; you are seeking an appreciable improvement (or advance) in:

  • How you make something
  • How your product performs
  • How much it costs to make

If achieving this improvement isn’t obvious and requires research as to which solution or approach will be more effective, then this comparison work could qualify as R&D.

R&D Examples for Your Sector

Projects that seek an advance, or appreciable improvement, will obviously vary from sector to sector.

For example, in manufacturing the advance could be identifying ways to reduce component count or increase reliability.  In I.T. or software development it may relate to improved security or reduced system overheads. In construction, a new engineering method or efforts to make products or processes environmentally friendly could also qualify.

Additionally, even if your project fails to achieve an advance following your research and trials, it can still qualify for R&D tax credits; in fact, not being completely successful can actually support the idea that there was a significant technological challenge.

The key point to remember is that an advance was sought, whether the end result was successful or unsuccessful – this is where the claims are made.

What You Can Claim for Your Advance

By now you may already have in mind a current (or potential) project that, much to your surprise, does qualify for R&D tax relief. But which costs can you claim for?

These generally fall into two categories:

  1. Activities that contribute directly to the attempted advance
  2. Certain essential administrative or supporting activities

Within these costs you can claim for salaries and the cost of employment (including employer’s national insurance and pension contributions). Happy days.

You may also be able to claim for materials in some cases, although recent changes to legislation restrict this option depending on the circumstance.

Don’t Miss Your Opportunity to Save

So if you were wondering if your business activities are eligible for R&D tax credits, then the answer could quite possibly be YES!

Of course, the area of R&D possibilities and applications is so vast we could never encapsulate it all in this brief overview. However, if you’re after a definite confirmation that you can claim R&D tax credits, there is a quick and convenient option. Just give us a call at R&D Tax North West1 on 01827 338118.

We will be happy to answer your questions and explain how R&D could apply to your business.

 

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