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Is it possible to claim R&D Tax Relief for unsuccessful R&D projects?

  • June 2021
  • 3 minutes

In the current economic climate, innovation can appear to be a frightening prospect. It can be difficult to strike a balance between the benefits of successful innovation and the risks that come with it. Funds are tight, especially in this economic climate, so being strategic with your innovative ventures is critical.

Project managers can get funding for their R&D projects in a variety of ways, one of which is claiming R&D tax relief. Successful tax claims will give funds for firms to move forward with future investments and maintain innovation more financially viable. The good news is that even if an R&D project fails on paper, you will almost certainly be able to claim R&D Tax.

taxqube Can You Still Claim Tax Relief for Unsuccessful R&D Projects?

Yes, that is the quick answer. The entire premise of research and development is to create a project that can only be developed through R&D. When a company has exhausted all of its internal research and knowledge resources in an attempt to solve a problem but is unable to, R&D is called in. Whether or not a project succeeds, HMRC makes it clear that you can still claim tax relief.

When you’re undertaking R&D within your company, there is no guarantee of project success, this is why you are furthering your testing and research by using R&D. Claiming tax relief for failed R&D projects is not only allowed but is encouraged as a policy under the R&D Tax Credits Scheme.

Innovation is fraught with risk. In addition, failed R&D projects may lead to a future problem solution or a redevelopment of the original project. To counteract failure, R&D tax credits were made available. It’s critical to remember that R&D tax credits aren’t meant to be used as a reward for success; rather, they’re intended to be used as an incentive to develop projects and encourage businesses to take risks.

taxqube How Are Unsuccessful Projects Still Valuable?

Though it is difficult to admit when a project fails, failed R&D projects provide a wealth of information. Most big, successful projects are likely to have had a lot of failure along the way. The threat of failure may appear daunting at first, but tax relief can help businesses stay afloat while still receiving funding to keep moving forward. This is exactly why the R&D tax scheme was created, to lessen the risks regarding innovation projects.

In the current times, though risk can seem very scary, innovation is also at its peak. By continuing to develop old and new ideas, you can help your business get ahead of the curve. With all of the uncertainty surrounding the economy, the innovation process right now is the key to survival. Company innovation can look different for every business and innovation management can be put in place in a variety of ways. This could mean changing your business model, improving company culture, technological change, design theory change, or even restructuring your company operations.

taxqube What Funding is Available for Failed R&D Projects?

R&D tax relief is one of the most profitable and consistent ways to assist in the funding of R&D projects, even those that fail. If a company can incorporate everything they’ve learned from failed projects, they’ll be able to turn them into successful ones in the future.

Learning from unsuccessful R&D projects could also spark new ideas or could even challenge the processes and the way you look at a problem. Sometimes a particular approach could result in failure, but by learning and developing further, your ideas could turn into a success in the future.

You can continue your research into new projects and new variations of failed projects by taking advantage of R&D tax relief. The options are limitless. Having this financial cushion encourages businesses to make a behavioural shift, where taking risks and experimenting with new ideas is no longer as intimidating as it once was.

Innovation sparks and encourages more innovation. As you invest in your company and your ideas, you’re more likely to keep investing and striving for greatness. This is the positive effect innovation can have on a company. Having the ability to fall back on tax relief, you also have the financial means to stretch further and find new possibilities, advances, and opportunities.

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