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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 R&D can be claimed—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 experts guide you on your project so you feel confident in achieving success through R&D 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. Business, legal or commercial challenges cannot qualify as they are not technological or scientific uncertainties, no matter how important they are to the company.

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. 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? Is it an outcome that would be obvious to them?

This means that if your R&D project has made an advancement in science or technology that another team in the sector could easily achieve, then a valid R&D tax credit claim is unlikely.

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

Example Case: software development

This example project centres around Company A’s need to recognise millions of data points input by hand by many people and process them into usable datasets for analysis.

Technological advance

Company A set out to create a data validation and orchestration framework to handle large volumes of interconnected data with different outputs. Their goal was to improve data analysis tools to make them 90% less dependent on manual input from operators.

Technological uncertainty

Company A wasn’t sure if it was even possible to automatically apply data logic across millions of datasets. No existing tools could handle automatic business logic for these unique data scenarios.

Describing the scientific/technical challenges in your technical report

As part of an R&D tax relief claim, you should 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 recently put together an article on preparing R&D tax technical reports 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 relief claims are tough and going it alone is 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 - we'd be happy to review your projects.