In computer software the advance is rarely implicit in the product. The advance comes not from the application layer, but from the technology layer. It is the science of technology that had to be advanced in order to develop the application that establishes eligibility as R&D.
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Below we've created 3 simple sections to help you understand how R&D tax credits work in software development and whether your business could make a claim.
Whether you’re a software development company or a business that develops software in-house, if you’re making an advance in computer science or information technology, you could be eligible for R&D tax credits.
You might be developing new products, processes, architecture techniques or services, or you might just be looking to improve existing ones.
Regardless, if the goal of your software project is to advance the knowledge or capability of the computer science, and information and communication sectors (not just your own company), then you should consider claiming for software development R&D tax credits.
Any company in any industry may be eligible for R&D Tax Credits.
Your software development project doesn’t have to be pioneering or even successful to qualify for R&D tax relief. But it does need to meet two criteria:
1. Does your project seek to create an advance in science or technology?
To meet this criterion, you must prove you’re doing at least one of the following:
2. Is your project overcoming a scientific or technological uncertainty?
When submitting an R&D claim for your software project, you need to prove to HMRC that the objective of your project is to overcome uncertainty at a technology level, and you need to show evidence that the uncertainty was not immediately resolvable.
"It was good to work with a team who are dedicated to their field and know the law, the claims process, the pitfalls and who knows how to draft the technical reports at speed. I can't really complain about how the R&D claim was done. We were very, very happy"
Head of Finance, CitySwift Ltd
By profiting from our specialist R&D tax credit knowledge and experience, you can be sure of securing & maximising your R&D tax claim. Typically, Myriad Associates submit R&D tax credit claims that deliver up to 3 x more value than in-house prepared claims or those filed by generalist accountants.About Myriad Associates
Common examples of software development projects that may qualify for R&D tax relief include:
In terms of qualifying tasks, the following activities would be considered eligible for R&D tax credits:
In addition, certain indirect support activities may qualify for R&D tax relief, such as:
You can claim relief on 25% of on qualifying expenses. The main areas of costs that can be claimed are:
It is not uncommon for an R&D team to consist of many individuals from different parts of the business. Your R&D project team may include the R&D Manager, a Lead Developer, Engineers, Project Co-ordinators, Quality Control and Testing specialists, and Cost Accountants, as well as members of the senior management team.
A business must submit its R&D tax credits claim within 12 months of the end of the accounting period during which the R&D activities took place. To make a claim, the business will need to complete the CT1 form through the Revenue Online System. More details can be found in our blog: How Far Back Can I Claim R&D Tax Credits In Ireland?
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