R&D Case Studies
RDP Associates assist over 500 companies annually, here we mention some case studies of R&D Tax Credit claims we have worked on. Read some of our R&D Case Studies and how we work with accounting firms and companies.
Accounting Firm – R&D Case Studies
Picking the Right R&D Tax Credit Service Provider
RDP was approached by an accounting firm, whose client was denied their R&D tax credit claim by HMRC. The claim was filed with the assistance of a 3rd party R&D tax credit service provider, who had prepared the claim.
The claim was based on the client developing a solution to make managers more effective in their jobs. While the solution was to be delivered through a software platform, research was carried out to identify the specific behaviours, skills, and competency levels that are responsible for managerial performance. Much of the description included in the R&D tax credit submission was based on research into employee behaviours, performance levels to achieve, and user acceptability of the solution. Unfortunately, social sciences are not an eligible area within the definition of R&D. Research into employee behaviour falls within social science.
However, computer science including software development is an eligible field of science. RDP reviewed the work done on building the platform and was able to identify technological uncertainties and advances in the area of algorithms, integration and scalability of the software. This development was independent of any behavioural research. In other words, the type of software development carried out could have been used in a number of applications. Which were outside of behavioural research, such as say engineering.
The claim was ultimately prepared in the correct manner by RDP and accepted by HMRC.
RDP has found many similar cases, where projects are incorrectly identified as R&D. As HMRC has substantially increased their review of R&D tax credit claims, we expect to see many more. To avoid these unfortunate situations, it is important to work with a knowledgeable and experienced professional firm.
Having over 35 years experience; filing over 10,000 R&D tax credit claims, some for the largest companies in the UK. Also being a member of the HMRC stakeholder group and having over 35 technical professionals, places RDP as a knowledge expert and value-added leader in this field.
One of the Largest Financial Institutions – R&D Case Studies
How distinct divisions identified opportunities in R&D tax credit and overcame their challenges
There are two main divisions within the IT departments of this company. One division had made an R&D claim in 2003, the other had not made an R&D claim previously.
When the first division had made a claim in 2003, the tax department as a whole felt uncomfortable with the process to identify projects and capture eligible costs. As a result, no claim was made in 2003. Which caused some uncertainty within the tax department as to whether HMRC would accept the claim.
The company did not feel confident that it had (a) properly identified R&D projects, (b) had adequate documentation to support the claim, and (c) had properly identified all eligible R&D costs.
For each of the two departments, RDP took a two-phase approach. The first phase was to identify all eligible projects. In addition, a very rough estimate of the eligible costs was provided against the eligible projects. A report was then generated outlining this cost/benefit of proceeding. Phase two involved an in-depth review of each project whereby RDP interviewed key technical primes. RDP assessed the projects against the DTI guidelines and the criteria to determine whether the project was eligible. Such as technological advancement, technological uncertainty, appreciable improvement, and systematic investigation.
During these interviews, RDP developed a “project description: which documented in writing why the project qualified as an R&D project within the DTI guidelines. In addition, RDP noted what documentation was available to support the R&D claim. This documentation not only included financial documentation such as salaries and labour allocation sheets. But also included documentation which supports the technology development. Which includes minutes of meetings, documented IT revisions, emails, notes, and logs.
Once RDP had drafted its project descriptions and detailed the costs by project. It then carried out a final review with the technical primes to ensure that the facts as gathered by RDP were accurate and as described in the project descriptions and cost summaries. The package was then assembled and RDP worked with the tax department within the company to prepare the necessary schedules to submit the R&D claim to HMRC.
RDP Associates was selected over other competitors, including the Big Four accounting firms, due to its experience and the knowledge of its staff. RDP brought with it 20 years of experience in assisting companies to make R&D claims. Further, RDP consultants include academically competent and professionally accredited individuals in the field of technology. With regard to the software and IT developed by the company, RDP provided such individuals as Jeff Laks, who has been involved in hundreds of claims and was involved in setting the guidelines as to what constitutes R&D in the area of software/IT. In addition, RDP was able to demonstrate its expertise by starting off with a small assignment to identify eligible R&D projects. Within a short amount of time, RDP identified 12 large projects for the periods 2005 and 2006.
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