The whole concept of R&D within architecture is that each project will present unique challenges that take a period of thought, design and testing before a build can be started. R&D will be found where the company have to change their process or materials to suit a unique situation and, therefore, can be shown to be advancing knowledge.
Generally, the following areas contain R&D, however, it is important to look at each project individually:
- Sustainable builds
- Re-purpose of buildings
- Grade listed buildings
- Flood plain/green belt work
- Studies in material performance
All these areas are known to contain R&D qualifying activity and are undertaken by most architects as part of their day job.
There is a huge amount of uncertainty in architecture which is combated by detailed design, testing and analysis. This is where it is easy to see R&D as ‘what we do’ rather than anything extraordinary, however, for tax purposes there is significant scope for a successful claim.
Timeline For R&D
HMRC expect us to be able to show a projects life cycle and be able to show where the R&D qualifying activity takes place on a project. To do this we can use the time sheets of a company to try and isolate areas such as technical design and development. We have experience working with the RIBA stage billing process and find this can be very useful in establishing a time line for R&D.
A general timeline would be as follows:
Areas of R&D
There are several areas in which an architect may find qualifying R&D for tax purposes. In order to qualify as R&D a project needs to show an advance in knowledge for the sector in either science or technology. This is a purposely broad definition given by HMRC as they are keen to allow innovative business relief on qualifying projects.
There are several areas that are readily accepted by HMRC:
- Grade listed buildings – if you have to change the way you would normally plan, work or any process within the design of a building due to a grade listing this will often cause a period of uncertainty which has to be resolved. The solution will, therefore, be novel and this would be a qualifying area for R&D.
- Working in difficult conditions – working within flood plains, green belts, nature reserves or in any other area with strict build conditions can also lead to a change in process from the norm and this would also be an area of R&D.
- Studies in material performance – when a company has to undertake a study in material performance this would be a qualifying area. For example, a building near the sea may require a façade that will not be eroded in the salty conditions. As the answer of what material to use is not readily available the period of design and development of knowledge would be a qualifying area.
- Sustainability and eco build – R&D within this area is readily accepted by HMRC, if a company designs a building to try and maximise efficiency this process is likely to fall within the definition of R&D.
This is not an exhaustive list and there are many other areas that could contain qualifying R&D costs.
It is important to look at each project in isolation in order to isolate the R&D activity.
Hamilton Blakes Method
Hamilton Blake believe in a hands-on approach and endeavour to work closely with our clients to ensure that each and every claim submitted is correct. We also offer a full enquiry service included within the cost of work which means that should HMRC ask a question relating to any claim submitted by Hamilton Blake we will be there to guide you through that process.
We begin with a face to face meeting where we discuss the projects in the company one by one for a period, this usually takes around one full day per year and allows us to get a deep understanding of the work, the company and the R&D within the company.
We then ask for access to the company financial records, specifically wages and time sheets as these are the main costs that make up an architects R&D claim. We will also need breakdowns of areas such as contractors, software and light and heat which we can also include in the claim.
Hamilton Blake then bring all of this information into a report which links each project and the R&D within back to the relevant legislation allowing the claim. Our deep understanding of HMRC workings allows us to write the report in such a way that we are answering the questions we know they need us to answer. This report will outline the costs being claimed and our methodology for attaining those costs.
We will then arrange a final day where we will present the claim to the client and work through any amendments that may be necessary. Once finalised we can either submit on the company’s behalf or work alongside the company accountant to submit.
As mentioned, Hamilton Blake are then on hand to ensure any follow up questions from HMRC are answered on behalf of the client.
We will also work with the client in order to look at the systems in place and suggest ideas which allow the R&D applicable information to be more readily available in future years.