With its recent announcements on R&D tax relief, the Government has made it clear that it intends to support the technology sector with additional opportunities for those innovating yet not being rewarded for it.
Tech innovators now have a more defined future thanks to this expanded scope. Businesses using artificial intelligence, quantum computing, and pure mathematics faced two obstacles for a long time before they could take advantage of the incentive: first, the exclusion of pure mathematics from the definition of qualifying R&D relief added an additional layer of uncertainty, and second, the significant costs of cloud computing did not qualify for relief either, meaning that firms investing in this type of innovation were not supported for all of their costs.
However, innovation and cloud computing are now more intertwined than ever. After all, there’s no reason an AI innovator should have to pay for the maths or computer power required to create innovative answers.
Both of these barriers will be removed by April 2023 as a result of the changes stated in the Spring Statement 2022. With this, companies in the IT industry, especially those that use AI, cloud computing, and pure mathematics, may apply for relief with more assurance. Of course, there will be a higher chance of HMRC investigation when there is more money on the table. However, if a company’s work qualifies for R&D tax relief, this shouldn’t prevent them from claiming it – Kirby and Haslam are expert report writers, meaning we have experience in writing reports day in, day out and know exactly what HMRC are looking for. We will also be able to establish exactly what in your project is claimable, making the process as smooth as possible.
What the Changes Mean in Practice
Simply said, when the increased scope is put into force, new opportunities will arise for tech companies. For instance, the addition of pure mathematics signifies that businesses making progress in this area will now be able to seek relief. Additionally, people that depend on datasets to progress technology might anticipate a potential rise in the level of relief that is readily available.
However, the majority of the focus is on the rising expenditure on cloud computing.
The majority of tech-related organisations are aware that cloud computing is not a marginal expense. The sheer power required for developing, running, storing, and maintaining technology can be a significant, inescapable cost of R&D.
While this is still the case, the inclusion of cloud computing within the range of R&D tax relief will have the effect of enabling businesses to begin recovering part of this expenditure, enabling them to place funds to other R&D endeavours or allocate more funding to compute power.
Optimising Your Claim
When adopting new procedures for your R&D claim, especially if you want to claim a sizeable amount of money, working with a trustworthy accountant will be key. Kirby and Haslam are knowledgeable about the details of the reforms and can offer case-by-case guidance on the best course of action for your company. Get access to our exclusive report writing service here – the reports will support companies’ claims for R&D and shield them from prospective audits. Additionally, they make sure businesses are aware of legislative changes so they may take the necessary precautions to avoid being subjected to an HMRC inquiry or fines.