R&D Tax Credit Examples

Describing various forms of tax relief can make it difficult for businesses to grasp them properly. They’re a theoretical solution. That’s why we’ve put together a list of real world R&D Tax Credit examples.

We’ll not only describe and explain R&D Tax Relief, but we’ll break down how existing companies made the most of these valuable opportunities too. From their struggles to their successful R&D claims and onwards to their escalating growth!

But before we check out these R&D Tax Credit examples, let’s briefly pass over the research and development tax relief scheme.

How do R&D Tax Credits work?

R&D tax credit relief is simple in theory.

The UK Government rewards your business innovation efforts by giving you back money for any research and development costs you incur either as a cash injection or in the form of lowered corporation tax.

Not so fast.

To receive money back, your activities need to fit the government’s particular view of R&D.

Your company needs to…

• Be a UK based company

• Research the creation of new products, processes or services.

• Change or alter an existing product, process or service

• Attempt to solve an existing problem

But some other limitations apply. The R&D Tax Credit changes in April 2023 may change a great deal for certain businesses, so make sure that you read up on them!

Can I qualify for R&D Tax Credits?

Many people unfamiliar with the scheme find it difficult to understand which research and development activities meet these standards. However, any industry has the potential to qualify for R&D Tax Credits.

That’s right. Pharmaceuticals, Waste Management, Food & Drink, Cyber Security, Cosmetics…

As long as you actively research and develop into improving that industry - you can qualify for R&D Tax Credits. Qualifying aspects of R&D include:

• Staff costs

• Agency workers

• Subcontractors

• Software licence costs

• Utilities

And many more depending on your particular industry and business model.

It may be easier to get a sense of what they’re looking for by taking a look at some real life case studies. Here are some R&D tax credit examples from different businesses that pursued innovation within their industries and overcame their different challenges.

R&D Tax Credit examples

Beam

Beam is social innovation at its finest. This organisation uses crowdfunding to raise money to assist homeless individuals, but that doesn’t stop them from taking advantage of UK R&D Tax relief schemes.

Beam helps them get into secure housing and stable employment. It uses social networking to boost campaigns and uses external partners to demonstrate credibility.

Beam’s social progress is made possible by its groundbreaking technical engineering and R&D. However, even though Beam’s mission is based around social innovation, its work in the social area doesn’t apply to R&D relief.

Social merit notwithstanding

Beam can only receive tax credits for the engineering and tech progress that powers it.

Assembling successful R&D credit claims began by shifting the focus from their merit, social impact, and charitable achievements.

R&D relief isn’t based on social impact or even human value. HMRC only considers the scientific advances powering any kind of social progress.

So which was more important? Continuing their life changing work, or stumbling through R&D Tax Credit claims so that they could continue fulfilling their projects?

Technical advances only

Beam has faced several technological uncertainties in building its social organisation.

They needed to incorporate FinTech, security checks, social networking, gamification, and surpass many challenges. The platform is entirely transparent and maintains updated data on its progress.

Without a set example to follow, Beam had to build its unique model from scratch. Its platform has advanced the fintech capabilities of charitable organisations.

Identifying the real driver

We tend to ascribe social progress to better values or improved ways of thinking. But new technological advances are usually hiding behind social leaps.

Beam was inadvertently making massive contributions to the future of Fintech, they simply didn’t have the time or expertise to manage successful claims.

These advances make business more efficient in addition to the bottom line. Not only that but with the help of R&D Tax Credit services they were able to focus on their primary work, while still making the most of R&D tax relief.

Your undercover tech improvements may too be eligible for R&D tax credits.

Dynamo

Second, on our list of R&D Tax Credit Examples is Dynamo. This tech startup was founded to make luxury social experiences more accessible via crowd sharing. It’s a social engagement platform linking users to top event promoters across the world.

This company is focused solely on rapid user acquisition and providing a great experience to its members. Not on pushing the rest of the industry forwards.

But like every good social network, Dynamo uses constant, rapid development to carve out its base.

Experimental development

Dynamo makes a great case study since its mission isn’t technological. It isn’t wooing new customers by showing off its advanced new coding or latest build.

Dynamo’s R&D work is internal, undercover, and done solely to enable its growth. This leaves things a little messy since the research and development advances are scattered throughout its infrastructure.

Companies doing work that involves many progressive iterations, corrections, and adjustments may find it difficult to isolate these activities and quantify the costs. An R&D Tax Credit expert isolated qualifying expenses, calculated, provided a technical report, and industry research and successfully submitted an R&D Tax claim to HMRC on behalf of Dynamo.

Uncovering internal value

All startups are fundamentally research and development based. But companies can’t submit the total cost of operation as a refund claim.

All R&D work still needs to be broken down to the technological progress of individual activities and the associated costs.

Working out unresolved problems or limitations in tech infrastructure qualifies as R&D. Costs related to staffing and software can be claimed.

Customised startup improvements

Many startups opt for custom development to get around software limitations, resolve system issues or simply find a cheaper way of producing the same result.

More often than not, Startups succeed in creating a development of some sort - even if it’s not the development that they first set out to create!

If you think that your activities may qualify for R&D Tax Credits, it’s worth talking to an R&D Expert to find out if your development is eligible for R&D relief.

Avvoka

Avvoka is a forward thinking legal group and the third of our R&D Tax Credit examples. They use leading edge technologies to deliver a core set of legal services at scale.

Avvoka applies artificial intelligence, automation, data analytics, and no code technology to document management, contracts, and collaborative negotiation.

They’ve completely disrupted the industry by introducing new technological capabilities within the legal arena.

Avvoka has never operated as a traditional legal services firm. It’s been tech based and innovative since day one. Avvoka is based on R&D.

Applied research and experimental development

Avvoka has many R&D activities. Most of them can generally be classified as applied research and experimental development.

Recognition not guaranteed

Avvoka is an innovative company. The firm seems like a perfect example of what the government wants. They’ve advanced their field, are highly productive, and continue to develop.

Yet, Avvoka was still missing out on R&D relief funds.

The government won’t go out of its way to hand a company cash. To receive all eligible support, R&D activities must be neatly organised and presented in specific claims.

Legitimate R&D applications

The government always wants proof that your R&D activities were legitimate and organised. Despite the vast intellects at Avokka, this systematic organisation needed an R&D expert on hand.

Even though Avvoka is based on innovation, they still needed to sort their tech advances into individual R&D projects, with each demonstrating a valid purpose and clear intent.

Once they did, Avvoka’s claims have provided valuable cash injections and lower corporation tax year after year.

Be the next success story

You don’t need to invent new technology or your own AI models to receive R&D tax credits. Adopting cutting edge technology, processes, or procedures is enough to qualify.

Has your company:

• Worked out uncertainties in a production process?

• Tested or analysed a new method for improved output?

• Hired outside consultants to resolve operational issues?

Common business activities like these can qualify for R&D tax credits. With our R&D Tax Calculator, you can estimate the potential savings that you’ll make in just a few keystrokes!

Get expert advice from our R&D Tax Credit experts that have saved over £30 million for our growing network of hundreds of Startups. Our successful track record of applications has let our clients scale up their businesses year after year.

Remember to check out our School of Startups. The first and last place you’ll ever need for all your Startup advice. It’s filled to the brim with guides, webinars, podcasts and more from industry leading experts and all drawn from their vast experience.

They were like you once; will you be like them?