Qualifying R&D is any project that seeks to advance science or technology in relation to your trade.
Specifically, this will include such things as:
- Experimental or theoretical work designed to increase knowledge
- Development of new products, processes or services
- Design and manufacture of pilot pants or prototypes
Is there a minimum spend in order to qualify?
There was a requirement to have a minimum spend on qualifying R&D in an accounting period of £10,000 but this has been removed altogether for accounting periods ending on or after 1 April 2012.
And what about a time limit for making claims?
Yes, companies have until two years after the end of the relevant corporation tax accounting period in which to make a claim.
For example if your company has accounts prepared to 31 March each year then you would have a deadline of 31 March 2014 to make a claim in respect of expenditure incurred in the year ended 31 March 2012.
Head of Tax, David Evans gives his view:
Over the last few years, it has become apparent to us that there is a widespread misunderstanding about what qualifies for relief. In our experience clients think that they need a laboratory, test tubes and staff in white coats to be able to claim!
In the first instance, clients should be asking themselves whether they produce anything innovative and unique. If the answer is yes, it is possible that they might be undertaking qualifying R&D.