R&D claims for software development are one of the more complex areas when it comes to R&D tax relief as the sector moves really quickly. What might be considered qualifying R&D now won’t be in a few years’ time, especially as lots of information regarding new development gets released into the public domain.
We have heard some accountants and R&D consultants claim “All software development qualifies for R&D tax credits” and some claim “No software development qualifies”. Neither is actually correct as the truth lies somewhere in the middle. Whilst some software development does qualify for R&D tax credits, an awful lot doesn’t and being able to accurately identify qualifying activities as opposed to non-qualifying is essential when preparing an accurate and honest R&D claim.
At the time of writing, HMRC have a spotlight on software development claims. They are opening a lot more enquiries into these claims, as historically it has been an area where lots of invalid or inflated R&D claims have been submitted.
To help companies better understand how R&D tax credits for software development may be applicable to their projects, we held a live session recently, a recording of which can be found here – https://vimeo.com/442960650/915b2d4ed6.