Eligibility Framework for qualification of projects in the software industry

The problem

There is plenty of knowledge and information out there about eligibility criteria when it comes to R&D tax relief. There are HMRC guidelines/BEIS guidelines and more recently a tax agent’s webinar from HMRC specifically focused on software claims.  But it is all of this, including HMRC’s webinar is presented at a high-level.

Information out there does not show you how to apply the eligibility criteria in a meaningful way (a way that resonates with a company's work). And for accountants and tax advisers, the information provides little in the way of support or direction around how to identify whether what a client is doing is eligible.  

The guidelines on R&D for tax purposes describe what they are looking for at such a high level, that it is difficult to apply with confidence to be sure that the requirements have been correctly understood. Even industry "competent professionals" cannot simply read the guidelines, and immediately understand if they apply to their work, let alone provide the right kind of key evidence for narratives to succinctly demonstrate and explain how.

The information out there does not help with the understandings of the adviser or the client because interpreting the guidelines is subjective.

Fear factors get in the way of accessing this tax relief

Software, more than any other industry is esoteric and extremely fast paced.  

The permutations of specialisms within the technology environments and their application are wide reaching. This in turn often requires associated niche specialisms to deal with a certain technology stack, code base or area of tech for applied knowledge.

As a layperson, or even an individual that has moved from a specific tech niche into R&D tax advisory, you feel that “I don’t understand their work enough to be sure”.

As a company expert heavily involved in project work, you feel that "I don't understand how or which parts of the work we do fits in with what the guidelines are looking for".

Layperson or expert, if you are new to R&D tax relief; or do not look at it frequently, self doubt kicks in:

• How do I know if something is challenging enough to count?
• How do I know if the work is breaking new ground sufficiently to count as an advance?
• How do I get my clients to understand what the guidelines are looking for and trust they understand sufficiently to identify qualifying projects?
• What is the right kind of information to capture and where do I start with all of this?

I've been there, I've experienced those moments of self-doubt, I've struggled to articulate understanding - I've learned what works.

Use a framework to form shared understandings

Having a framework that guides clients through the "how", helps them to deliver answers to the 3 key pillars of eligibility in a way that resonates with clients in the software industry. It makes a huge difference.

What is it?

This is a guide to help you achieve those important shared understandings when it comes to directing the eligibility discovery process.  Something that is done for new clients and more than likely annually, or in year for existing clients.

The framework delivers a process through an approach that is meaningful to clients undertaking software development.  It serves a dual purpose of both directing clients in identifying qualifying project work whilst simultaneously helping them to deliver the information needed for the R&D claim efficiently.  

This is an “applied” knowledge share.   It collates years of my learning and experiences around what works and what doesn’t when it comes to gaining understandings to gather the specific information needed to identify and support qualifying projects for R&D.

How does it work?

It is a communication tool to enable layperson accountants/tax advisers to speak with clients in the software industry with confidence … even though you are not technically trained in their industry.

It is a communication tool to enable a software professional (project lead) to collate specific pieces of information needed to identify, evidence and demonstrate how work meets the requirements of the BEIS guidelines, without regurgitating the BEIS guidelines. It is presented as a process that resonates.

It provides you with a repeatable approach and a ready to go guide that you can readily incorporate:

Advisers -

• You can duplicate the guide in your own branding to use "as is" or
• Extrapolate parts of the guide to reformat into other documents as you see fit.
• Incorporate into training staff for your R&D team that are moving from the software industry to support with R&D claims.  Because they too do not know what they are looking for or how to apply knowledge until you show them.

Companies -

• You can use the guide to work out what qualifies and document the key pieces of information for the technical narratives (whether you are looking to prepare a claim yourself or work with an adviser).

Better client experience

This is a resource that I use with my clients to provide a relatable framework to begin to capture information to assist with identifying whether qualifying criteria on the meaning of R&D are met.

I provide it to clients so they can be well prepared for technical discussions.

For clients I work with year on year, many seek to build in the steps into their project development road map meetings, to capture relevant information as they go along - making the process easier than having to look back retrospectively and more thorough because good quality information is documented as it presents.

Takeaway

This resource will be helpful for accountants, R&D advisers and companies to support the identification of potentially qualifying projects.

You might also find my detailed resource on how to prepare an R&D tax relief claim that focuses on the issues relevant to the guidelines helpful. You can access this here.

Please note that the sales platform used is Gumroad, which will add VAT and then convert the value into US dollars, so no need to worry when this happens. You will be able to obtain a VAT receipt from the sales receipt the platform sends, there is a button to select this, under the button where you click to obtain the download.