Clinical Research, Labs and Cosmetics R&D Tax Relief
Clinical Research, Labs and Cosmetics Experts
If Covid-19 has show us one thing over the last few years it is that the UK’s investment and support for Clinical and Laboratory Research leads to high class outcomes. Even before the advent of Covid the sector is vibrant in the UK, whether it be the large established business giants or the thriving biotech start-up industry that surrounds Cambridge and Oxford Universities the UK is leading the way..
We are also at the cutting edge of research into cures for some of the most devastating diseases and illnesses, whether it be dementia, Kevin Sinfield performing amazing feats of endurance to raise money to support ground breaking research into Motor Neurone Disease, or research into rarer diseases and Orphan drugs, that work is being performed here in the UK.
Recent changes coming into the R&D Tax Relief schemes around subcontractors and refocusing the reliefs on to spend in the UK has led to concern within the industry, but an exemption has been granted for Clinical Research, which can only be undertaken in countries or regions where the population for the Clinical Trial exists, or where the expertise is based.
The introduction of Data and Cloud Computing costs for year ends stating after 1 April 2023 will also have a significant effect on those companies using artificial intelligence in drug discovery.
Can Clinical Research Qualify for R&D Tax Relief?
At Cooden R&D, we help businesses across clinical research, life sciences, laboratory development and cosmetics and understand whether their innovative work may qualify for R&D tax relief. This is because our founder spent 6 years working as a financial controller, leading the R & D claims process for 2 UK businesses and Dutch & French subsidiaries, in what is now a top 5 global clinical research organisation, Syneos Health.
Clinical research, laboratory and cosmetic formulation projects may qualify where they involve attempts to advance science or technology and overcome genuine scientific or technological uncertainty.
To qualify, the work must typically involve:
- An advance in science or technology – creating an improvement in products, processes or technical capability beyond what is already readily achievable.
- Scientific or technological uncertainty – facing challenges that cannot be easily resolved using existing knowledge, methods or standard approaches.
- Competent professionals – involving specialists such as scientists, researchers, chemists or technical experts who have the expertise to assess and address the challenges involved.
- Work undertaken to resolve the uncertainty – carrying out pre-clinical development to create or synthesise compounds, clinical trials and investigation, testing, experimentation or development to overcome the scientific and or technical challenges.
Can Clinical Trials Qualify for R&D Tax Relief?
At Cooden R&D, we help businesses across life sciences, clinical research and healthcare understand whether their development activities may qualify for R&D tax relief.
Clinical trials do not automatically qualify for R&D tax relief. The key factor is whether the work involves overcoming genuine scientific or technological uncertainty and achieving an advance in science or technology.
Different stages of research may involve qualifying R&D activities, including:
- Preclinical research – Laboratory studies and early-stage development may qualify where businesses are investigating new approaches, formulations or processes that involve genuine scientific uncertainty.
- Phase I, II and III clinical trials – Trials may qualify where researchers are testing new treatments, technologies or processes while attempting to resolve scientific or technical challenges that cannot be easily answered using existing knowledge.
- Phase IV or post-approval research – Post-approval studies may qualify where they involve further scientific or technological development, rather than routine monitoring or data collection.
What Clinical R&D Costs Can You Claim?
Clinical research and life sciences businesses may be able to claim R&D tax relief on costs directly linked to qualifying research and development activities.
| Cost | Potentially qualifying? |
|---|---|
| Clinical trial participant costs | ✓ Potentially. Costs directly linked to eligible clinical research activities may qualify where they are part of resolving scientific or technological uncertainty. |
| R&D staff costs | ✓ Potentially. Salaries and related costs for scientists, researchers, laboratory staff and other employees involved in qualifying R&D activities may be included. |
| Laboratory consumables | ✓ Potentially. Materials and consumables used during qualifying research, testing and experimentation may qualify. |
| Laboratory and testing costs | ✓ Potentially. Costs associated with carrying out eligible research, analysis and development activities may be included where they directly support the R&D project. |
| Software and data costs | ✓ Potentially. Software, datasets and digital tools used directly for qualifying R&D activities may qualify where they meet HMRC requirements. |
| CRO or subcontracted R&D | Depends. The eligibility of outsourced research depends on factors including the contractual arrangement, the nature and location of the work, all of which are part of HMRC’s current rules on contracted out R&D. |
| Externally provided workers | Depends. Certain externally provided workers may qualify where they are directly involved in eligible R&D activities and meet the relevant requirements for including overseas workers. |
| Routine regulatory or compliance costs | ✕ Generally not. Standard regulatory submissions, approvals or administrative activities would not usually qualify unless they form part of resolving a genuine scientific or technological uncertainty. |
Can Overseas Clinical Research Qualify?
Overseas clinical research may qualify for R&D tax relief in certain circumstances, but specific rules apply depending on factors such as where the work is carried out, the nature of the research and the relationship between the businesses involved.
Clinical research projects can involve complex international arrangements, including overseas trials, research partners and specialist providers. These situations should be reviewed carefully to determine which costs may be eligible under HMRC’s current restrictions on overseas R&D.
If your R&D activities involve overseas research or clinical trials, our specialists can help assess your circumstances and identify whether any eligible expenditure may be included within your claim.
What Evidence Do You Need for a Clinical R&D Claim?
The evidence required will depend on the project, but typically includes:
| Evidence type | Examples |
|---|---|
| Project and technical evidence | Project descriptions, research objectives, details of scientific or technological uncertainty, and explanations of the work undertaken to resolve those challenges. |
| Competent professional involvement | Evidence from scientists, researchers, clinicians or technical specialists involved in planning, conducting and evaluating the R&D activity. |
| Research and trial records | Clinical trial documentation, laboratory records, testing results, experimental data and analysis of outcomes. |
| Development and experimental evidence | Records of prototypes, trials, alternative approaches investigated and results used to refine the research process. |
| Payroll records | Employee costs for staff involved in qualifying R&D activities, supported by payroll and time allocation records where required. |
| Supplier and CRO costs | Invoices, contracts and supporting documentation for qualifying subcontracted research or external R&D activities. |
| Participant-related costs | Records of eligible clinical trial participant payments and associated expenditure. |
| Accounting records | Financial records showing how qualifying costs were identified, calculated and included within the claim. |
Clinical Research, Labs and Cosmetics Tax Relief FAQs
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Can clinical research qualify for R&D tax relief?
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Do clinical trials automatically qualify for R&D tax relief?
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Can pharmaceutical, biotech and life sciences companies claim R&D tax relief?
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Can cosmetic product development qualify for R&D tax relief?
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What clinical research costs can be included in an R&D tax claim?
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Can CRO costs qualify for R&D tax relief?
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What evidence is needed to support a clinical R&D tax claim?
Book a FREE 15 Minute Call
We’ve found that an initial 15-minute phone call is normally sufficient for us to determine whether there is some potential in a project. Choose a date and time to schedule in your free, no obligation call with our experts.
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Does my Business Qualify?
The simplest definition of R&D is when a company looks for an advance in science or technology. This is deliberately broad and it means it can be interpreted to include the development of physical technologies as well as software.
In order to get R&D tax relief for a technology project, you will need to show in your claim that your company looked for an advance, had to overcome an uncertainty, took steps to overcome this uncertainty, and that this work couldn’t have been achieved easily by someone in your industry.
It only takes 15 minutes to find out if you are eligible for R&D Tax Credits – why not book in a call today?
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