What's this R&D nonsense then?

**stek** · 18 October 2016, 13:36

Originally posted by TheCyclingProgrammer View Post

And I'm pretty sure it is utter nonsense, but has anyone else had this?

Link is to Harvey, company Grant Central Ltd.

I'm guessing its some kind of bulltulip R&D claim scam that will inevitably catch up with those who get suckered in a few years down the line.

ISTR when I was in the accountancy game R&D expenses were write-offable, though I'd struggle to think what R&D costs a one-man contracting company would have.....

**Lance** · 18 October 2016, 14:11

Originally posted by stek View Post

ISTR when I was in the accountancy game R&D expenses were write-offable, though I'd struggle to think what R&D costs a one-man contracting company would have.....

Stek has it one.

A lot of companies use it to cover salary and other expenses for work done on R&D.
Let's say for example you write a web CMS system, and that CMS system will be used for your customers websites.. The costs of writing that could be used to offset tax against R&D. However as a one man contractor you've not really got any costs (just salary and pension maybe).
If a customer is paying you to write a CMS system then you can't claim it back. It's R&D for your own company purposes.
You also need to justify it. Proper companies use time sheets to track any R&D work.

If you're being paid to write it then it's not R&D in this context.

**original PM** · 18 October 2016, 14:14

Well if you are one man tech company surely any kit you buy with the view that it will be used for R&D purposes then it can be claimed back

So for example fancy writing some apps for apple devices? well you will need to buy an iPhone and iPad to test them on....(development)

However proving that that was what they were used for solely and exclusively may be difficult.

But then you could argue that you used other apple apps so you could get an idea for the look and feel of some apps to give you some idea of what the best option for you app would be (research)

**Lance** · 18 October 2016, 14:15

Originally posted by Lance View Post

However as a one man contractor you've not really got any costs (just salary and pension maybe)

Check with your accountant if pension would count as an R&D expense. It would only be pro-rata if it was in any case, but may be excluded explicitly by the rules.

IANAA

**Lance** · 18 October 2016, 14:17

Originally posted by original PM View Post

Well if you are one man tech company surely any kit you buy with the view that it will be used for R&D purposes then it can be claimed back

So for example fancy writing some apps for apple devices? well you will need to buy an iPhone and iPad to test them on....(development)

However proving that that was what they were used for solely and exclusively may be difficult.

But then you could argue that you used other apple apps so you could get an idea for the look and feel of some apps to give you some idea of what the best option for you app would be (research)

If you bought an iPhone by the company then it's before tax anyway so your R&D tax credits are not relevant.

**Lance** · 18 October 2016, 14:18

Originally posted by TheCyclingProgrammer View Post

I'm guessing its some kind of bulltulip R&D claim scam that will inevitably catch up with those who get suckered in a few years down the line.

It's genuine. Gordon Brown as chancellor brought it in in the early 2000s (may have been late 90s - I've slept since)

**northernladuk** · 18 October 2016, 14:30

Originally posted by original PM View Post

Well if you are one man tech company surely any kit you buy with the view that it will be used for R&D purposes then it can be claimed back

So for example fancy writing some apps for apple devices? well you will need to buy an iPhone and iPad to test them on....(development)

However proving that that was what they were used for solely and exclusively may be difficult.

But then you could argue that you used other apple apps so you could get an idea for the look and feel of some apps to give you some idea of what the best option for you app would be (research)

Not at all. There is pretty clear guidelines about what R&D is. Development and skilling up is not in them.

There is a definition here for example.

Definition of R&D

R&D is defined in accordance with general accounting practice but is further modified by the guidelines produced by the DTI in 2004. In general there must be uncertainty that the final objective can be achieved and there must be an advance in science or technology through the resolution of scientific or technological uncertainty. The knowledge being sought must also not be already available in the public domain.

**Lance** · 18 October 2016, 14:46

Originally posted by northernladuk View Post

Development and skilling up is not in them.

I know of at least one company who ran those costs through the scheme. Primarily development rather than skilling, but some cross-training certainly.
Legal? The accountant was OK with it. And they've been doing it for nearly 10 years now.

**TheCyclingProgrammer** · 18 October 2016, 14:48

Originally posted by original PM View Post

Well if you are one man tech company surely any kit you buy with the view that it will be used for R&D purposes then it can be claimed back

So for example fancy writing some apps for apple devices? well you will need to buy an iPhone and iPad to test them on....(development)

However proving that that was what they were used for solely and exclusively may be difficult.

But then you could argue that you used other apple apps so you could get an idea for the look and feel of some apps to give you some idea of what the best option for you app would be (research)

I can see how some of these things might be considered R&D in laymen's terms but I'm not sure they meet the definition of R&D that HMRC uses for tax purposes, which is quite specific.

What's this R&D nonsense then?