Well, actually although this is a valid question, it isn’t the most important one. That is, unless you are in an organisation that is not subject to Corporation Tax. This, therefore, excludes partnerships, LLPs and government organisations.
Apart from that, all we need to determine if your development efforts qualify according to the HMRC guidelines.
Research and Development is not all boffins in white coats, not even is much of it ‘rocket science’. It is about activities undertaken to develop innovative solutions to problems, it is about overcoming technical uncertainty, it is about advancing knowledge. All of these are activities that companies who are moving forwards are familiar with. But not many company accountants are.
The fields of operation are many and various, and Information Technology is certainly one of the core fields.
In essence, each piece of work that you have undertaken that could be described as development has to pass these four tests.
- Has the project resulted in technical advancement or new knowledge?
- Are there uncertainties in the project, could it fail?
- Was there a process applied to the project to surmount the uncertainties?
- Were the project leaders technically competent?
Note that there is no requirement for the project to be successful. You may have had a project that showed how NOT to do something – that’s technical advancement, so long as it was a well managed and executed project. After all there were uncertainties in the project.
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