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R&D Tax Credits: What Does "Technological Or Scientific Uncertainty" Actually Mean?

With the R&D Tax Credits scheme, companies can fund their groundbreaking projects by offsetting R&D spending. However, HMRC maintains stringent criteria for what qualifies as research and development, which may prove difficult to navigate without expert assistance.

Companies of all sizes can benefit from R&D Tax Credits if they take risks and push the boundaries to innovate. From developing a new or improved product, service, or process to attempting to solve an unsolved problem, any expenditure that qualifies as Research and development might result in eligibility for tax credits—regardless of whether the project succeeds or fails. Taking advantage of this advantageous scheme is essential for staying ahead in today's business landscape.

It’s the “scientific or technological uncertainty” where people come unstuck

Understanding the HMRC's definition of eligible R&D, which requires that scientific or technological advances must benefit wider fields rather than just a single company, can be daunting for many businesses.

With highly specialised projects and inexperienced claimants in particular feeling overwhelmed, it is often advantageous to speak with R&D tax credit experts before starting an official claim. R&D tax credits experts guide you on your project so you feel confident in achieving success through Research & Development tax reliefs!

The formal definition of a scientific or technological uncertainty

An important point to note is that the uncertainty must be directly related to science or technology. So a business, commercial or functional challenge would not be a technological or scientific uncertainty in this context.

According to government guidelines:

"Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field.”

Additionally, the knowledge or information must not already be available in the public domain. Again, our team are happy to discuss this with you and how it relates to your project where required.

The clarity test

When assessing if you have a valid R&D Tax Credits claim, ask yourself the “clarity” test. Can your competitors easily replicate what has been achieved? Or is it an outcome that would not be obvious to them? This means that if your R&D project has made an advancement in science or tech that a competitor could easily replicate (assuming they had the same resources), then a valid R&D Tax Credits claim is unlikely.

Remember, this program incentivises innovation and progress, so make sure there's truly something new and innovative in the mix!

An example: Software development

During an R&D project, developing a specific piece of software or algorithm may be required to complete the job. However, it may not be obvious from the outset whether this new piece of software can actually be created or whether it will even meet the business requirement. This, in turn, may necessitate technical or scientific advancement (not simply an off-the-shelf solution), which could also attract R&D Tax Credits.

Describing the scientific/technical challenges in your technical report

As part of an R&D Tax Credits claim, you will need to compile a high-quality technical report. Typically, this report explains the features and challenges of your R&D project in more detail, describing to HMRC inspectors exactly what you faced and why you believe your project is eligible.

Accurately and concisely explaining the scientific and/or technical hurdles you encountered is central here and could mean the difference between success and failure. We recommend making your technical around two to five pages of A4, to include up to three projects.

We recently put together our How To Prepare A Technical Report For An R&D Tax Credits Claim article which explains everything in more detail.

Getting to the crux of a technical report, indeed conveying a technical or scientific uncertainty in general, is hard. It’s common knowledge that R&D Tax Credit applications are tough and going it alone is strongly discouraged - this is what makes the Tax Cloud so popular.

Why should I use the Tax Cloud portal for my R&D Tax Credits claim?

Leading R&D tax consultancy Myriad pioneered the revolutionary Tax Cloud portal, which was released in 2017. Our specialist team extensively researched and developed this inventive creation.

Boasting a highly accomplished team of R&D professionals on hand to guide you throughout the process, Myriad is well-versed in the field of research and development funding. Our expertise allows us to expertly guide clients through tax relief processes - avoiding common mistakes along the way. We are proud to boast an exemplary success rate; with engagement resulting in successful outcomes for our trusted clients.

Take advantage of Tax Cloud's seamless online system to file your R&D tax credit claim. With access at all times, you can easily take control and our service and support are here for you every step of the way Our cloud-based platform provides an easy step-by-step process from start to finish, with our experienced team available every step of the way for even more peace of mind.

If you have questions, contact us, or dive deeper into the world of R&D tax credits with our comprehensive FAQs blog – check it out here! 🔍