There are many misconceptions about Research and Development (R&D) Tax Relief, which can create confusion about who is eligible and what activities qualify. The scheme is designed to support businesses that address genuine scientific or technological uncertainty, but myths often make it difficult to understand the boundaries of eligibility.

Here we clear up the top five myths, so you can see how your business might benefit.

1. “Any commercial innovation qualifies as R&D.”

Some businesses believe that launching a new product, improving aesthetics, or innovating commercially is enough to claim R&D Tax Relief.

Reality: Eligibility depends on resolving scientific or technological uncertainty, not simply introducing something new to the market. Examples that do not qualify include:

• Rebranding or repackaging an existing product.
• Updating product design for appearance only.
• Developing a new commercial model or service without technical challenges.

In contrast, projects may qualify if they involve tackling technical barriers, such as:

• Creating packaging that preserves shelf life using novel materials.
• Developing software that performs beyond the limits of standard technologies.
• Engineering a product to meet performance levels not achievable with current methods.

R&D Tax Relief is not about commercial novelty — it is about solving technical problems where the outcome was uncertain.

2. “R&D Tax Relief is only for high-tech companies, not industries like food or manufacturing .”

Many businesses assume the scheme is restricted to technology firms, but it also applies to scientific and industrial sectors such as food science, engineering, and advanced manufacturing.

Reality: Eligibility depends on overcoming scientific or technological uncertainty in the fields of science and technology. Examples that may qualify include:

• A food manufacturer developing biodegradable coatings to extend shelf life while maintaining food safety, where no established solution exists.
• An engineering firm creating a component that can withstand both extreme pressure and fluctuating temperatures by working with novel alloys.
• A manufacturer introducing enzyme-based processes to reduce energy consumption while ensuring consistent product quality.

R&D Tax Relief applies across industries, but eligibility is limited to activities that address genuine scientific or technological uncertainty within a specific project.

3. “Our project failed, so it will not qualify.”

Many companies dismiss failed projects as wasted time, but in the context of R&D Tax Relief, they can still be valuable.

Reality: The scheme is about the attempt to overcome uncertainty. If your project did not succeed but involved genuine R&D, your costs may still be claimable. A failed outcome can even highlight the complexity of the challenge and prove that the work addressed true scientific or technological uncertainty. Examples include:

• A prototype that did not function as intended.
• A new process that proved unscalable.
• Software that could not deliver the required performance.

Failures are part of innovation. HMRC recognises the technical risks involved, making failed attempts just as important as successful ones.

4. “We are too small (or too big) to apply.”

Some believe R&D Tax Relief only benefits small companies, or that large organisations are excluded.

Reality: For accounting periods beginning on or after April 2024, HMRC introduced a merged scheme to simplify access. Both small and large businesses can still benefit, provided their projects meet the eligibility criteria.

5. “It is too complicated and time-consuming.”

It is true that preparing an R&D claim involves detail, but this myth often puts companies off unnecessarily.

Reality: With the right support, the process becomes manageable and efficient. Experienced advisors can:

• Identify eligible activities and costs across your projects.
• Prepare the required technical justifications to evidence uncertainty and innovation.
• Ensure compliance with HMRC’s evolving guidance, minimising the risk of enquiry.

What may feel complex internally can be simplified with expert help. The potential return – which is up to 20% percent of qualifying costs — makes the effort both practical and highly worthwhile.

Why These Myths Matter

Misconceptions about R&D Tax Relief can lead to confusion, uncertainty, or even ineligible claims. Understanding the true criteria is essential to ensure that businesses only claim for genuine R&D activities that involve scientific or technological uncertainty.

How Inventya Can Help

At Inventya, we help businesses unlock the full potential of R&D Tax Relief by:

• Eligibility Reviews: Spotting qualifying activities you may have overlooked.
• Claim Preparation: Building robust, compliant narratives that clearly evidence your R&D.
• Financial Accuracy: Ensuring every eligible cost is captured, from staff to consumables.
• HMRC Compliance: Keeping claims in line with the latest requirements to minimise risk.
• Future Planning: Helping you set up processes to track and record R&D efficiently for future claims.

With our expertise, you can move past the myths, claim with confidence, and reinvest your savings into new innovation.

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