Manufacturing R&D Tax Relief

Absolutely. If any of the design, prototype development and testing take place in the UK, these are all eligible activities and can be included in the R&D Claim. You can also still claim for any offshore costs relating to development activity in any tax accounting periods starting before 1 April 2023.

There are too many to list in detail, but if you are developing a new material, product or device or creating a new manufacturing process, then you are very likely involved in Research and Development. Also if you are making an appreciable improvement to any of the aforementioned, you are likely to be involved in Research and Development. Also if you are aware of an advance already being achieved, but the details of how it has been achieved are not in the public domain (because it is a trade secret), trying to replicate that advance can still be R&D activity, however routine analysis, copying, reverse-engineering or adaption of an existing product is unlikely to be R&D.

We’ve worked with a variety of Manufacturing businesses, they have included Electric Trials Bike Design and Manufacture, Horse feed, Audio Visual Systems, Heating Systems, Dispensing Systems, SUDS manufacturers and many many more.

No, absolutely not. Your project just has to be seeking an advance, it doesn’t have to achieve it. Actually, failure no matter how small, is almost a requirement for all R&D claims. If your project went from start to finish with no deviation, you were either very lucky or you knew what you were doing. In either case, HMRC are likely to suggest that R&D didn’t occur if your project progressed without a hitch. So document and embrace your failures.

Yes, but we will need to understand the contractual relationship that exists between you and your customer.

If the work is subcontracted to your company, then it maybe able to claim the Research and Development Expenditure Credit if your customer is either a Large or International company or a UK entity not subject to corporation tax, such as a partnership or an individual. If your customer is a UK SME then they will be able to claim for your subcontractor costs in their own claim.

HMRC are also focusing heavily on subsidised expenditure at the moment, there have been two conflicting judgements recently, which has made this a contentious area. If the financial element of your contract has a significant upfront fee, or all of the money is provided to you on signature, then it is likely that your work has been subsidised. If that is the case you will be able to claim the Research and Expenditure Credit.