As the definition of R&D for the purposes of the tax credit becomes more clearly defined it is apparent that many design and development activities will qualify for the relief. However, few companies are claiming for the eligible activities outside their research centres.

Customers in the Defence & Aerospace sectors demand products that require state of the art technology. Ensuring that the technology used in these products performs effectively and safely is extremely challenging. All too often this type of development is not included when an organisation considers R&D tax credits either because of the breadth of the definition, or the ability to include customer funded work, is not appreciated. Consequently, the significant benefits that are available go unclaimed. Those that do carry out reviews of these areas often find that determining exactly which activities are eligible, and where the technological uncertainty ends, is extremely difficult.

The task of justifying the claim often rests with the Finance team, who are not familiar with the technology, or senior technical staff who are dealing with demanding development activities. Documentation to support the claim is very different to that produced internally on a project and so is time consuming for those producing it for the first time or who are unfamiliar with the complexities of the tax legislation.

For more information download our brochure on R&D tax relief opportunities for organisations in the defence and aerospace industries (PDF, 68KB).