At Direct R&D we work with businesses in the ‘Food and Drink’ sector as it is one of the most important sectors, as it affects everyone on a global scale and there is so much potential opportunity for R&D to make a positive impact. If you as a business are looking to resolve uncertainties, by creating a unique process that includes rigorous market research and testing, chances are that you could be eligible for R&D tax relief.
The definition for which projects can qualify for R&D is incredibly broad, for a deeper understanding check out our definition here. In the Food & Drink sector examples of R&D could include making products more preservable or keeping up with the ever-changing consumer demands by making products vegan or gluten-free. Ultimately your project needs to recognise and identify a scientific or technological uncertainty.
Ensuring the food is up to its highest standard and constantly improving efficient delivery
Keep documented data and information on any findings that will contribute to your R&D
Creating new processes into the R&D that can influence the life-cycle of the food items
Changing the recipe for constant improvement in certain features e.g. colour, taste
The rules of R&D are not exclusive to the above list. They are put into place to reward and refund those who are dealing with uncertainty.
The result of your R&D doesn’t have to be a success! Your business can still be eligible for a refund even if the project was unsuccessful!
There are five categories within Agricultural R&D claims that can be claimed back for; subcontractors, staff costs, externally provided works (EPWs), consumables and finally, heat, light and power.
Below, we have detailed how you could include these in your claim.
If you rely on a third party to help with part of the R&D process – this isn’t an issue! You can still use These claims are qualifying expenses for the R&D tax relief scheme.
A large majority of R&D Tax Relief claims involve staff costs, these costs can be encountered for staff who are involved in the R&D project either directly or in-directly.
A direct staff cost that is claimable is the expertise or advice from a competent professional, this is usually someone in a senior position in the industry that has had a direct involvement or effort in the R&D project, or a member of staff that has a defined and technical role that is actively involved in the project.
An indirect staff cost is still valuable in the process of your claim, it covers the ground of members of staff that help to enable R&D by being part of the management process or help to support the R&D taking place.
Externally provided workers (EPWs) are temporary workers on your R&D project, they are often sourced from an external agency who is responsible for their contract. The expenses spent on EPWs are still eligible for part of your claim, in fact you can claim up to 65% of tax credit relief on them no matter how big or small your company is.
A consumable item is any item that is used or transformed whilst in the process of undergoing R&D activity. It includes items such as raw materials, software licenses or even stock used in your project.
The idea is that these items no longer have any use after the project as they are so consumed by the activity undertaken and can be counted as qualifying expenditure.
The utilities that you use during your R&D activity, such as heat, light, power and water are all eligible to claim back with your tax relief claim. You just need to work out the proportion of each of them that was used during the activity.
This can be difficult to work out, however that is where we are here to help you with at Direct R&D using the knowledge and experience of our expertise advisors.