Administrative changes to construction R&D
What qualifies for R&D in construction?
From August 2023, all R&D tax relief claims had to be submitted with an Additional Information Form. This form provides HMRC with information regarding the costs being claimed as well as the R&D activities being undertaken. Additionally, companies who have not made a claim for R&D tax relief in the previous 3 years must now submit an advanced notification form to HMRC within 6 months of the end of the company’s accounting period. Innovation in the construction sector For the construction sector, these changes could be both advantageous and challenging. Businesses acting as both main contractors and developers may benefit, as they can now claim for their subcontractors’ activities. Whereas specialist firms working under subcontracting arrangements will now face limitations. Companies will also need to be mindful of the PAYE/NIC cap and the employment arrangements of businesses in the construction sector. Where the trade and employees often exist in separate entities, this may prevent companies from realising relief when in a loss-making position.
While it can be challenging to make R&D claims within the construction sector - the industry is traditionally seen as less innovative compared to sectors like technology - construction companies can still benefit significantly from R&D tax relief. It’s important to note that for R&D activities to qualify, the products and processes developed must achieve an advance in science or technology, and not simply be new to your company. Some of the most common R&D projects we come across within the construction sector are as follows:
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Use of new and eco-friendly materials and processes
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Innovative building methods and overcoming design and engineering uncertainties.
But there are some common areas of qualifying R&D which are often overlooked such as:
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Unsuccessful and internal projects
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Expenditure where there isn’t a new product – R&D can be related to changes or modifications of an existing product or process.
How to make a qualifying claim for R & D in construction Acquainting yourself with the R&D criteria relating to your company will help you to make a compliant qualifying claim. Along with a trustworthy agent who can guide you through the process, and importantly be there for support should HMRC select your claim for detailed scrutiny. At Scrutton Bland, we have a dedicated team here to support you with both identifying projects eligible for R&D, and in guiding you through the process of making a claim. To get in touch please call Tyler on
0330 058 6559 or by emailing hello@scruttonbland.co.uk
P R O P E R T Y A N D CONSTRUCTION | SCRUTTON BLAND | 7
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