Navigate to your Novel organisation page and select the Apps tab at the bottom of the sidebar. When on the Apps page, you can connect your organisation to Xero.
Selecting Connect to Xero will redirect you to Xero’s website which will list the organisations within your Xero account. From here you will be able to authorise Novel access to an organisation of your choice and see what permissions Novel is asking for.
If you only have a single company within your Xero account, it will automatically be added to your chosen Organisation in Novel. If you have authorised multiple companies within your Xero account, you will be presented with a screen to choose which company you would like to connect to your Organisation in Novel. This area will display the company name, registration number and is searchable.
Once connected the Apps page provides you with the details of the Xero company you have added. Here you will also have the option to remove your access, or if you are the admin of the Organisation in Novel, you can also remove the connection between your Novel Organisation and the Xero company. This page will display the name and registration number of the connected organisation and will also detail the Xero ID for that organisation.
Step 5 – Xero connection management
Since you may have multiple Organisations within Novel it may get a bit confusing as to the connections that you have made or you may forget over time. We have added all current connections to a centralised panel in your profile section, which can be accessed via name in the top right-hand corner. Here you can monitor which authorisations you have made and also remove or disconnect any authorisations between Xero and Novel that you no longer require.
Step 6 – Xero use within Novel
Now that you have connected Novel and Xero, you can simplify the inclusion of your costs for your R&D tax relief claim.
When in the Financials sections of an organisation you will be able to add costs to your claim to the following R&D tax relief cost categories:
Externally Provided Workers
Clinical Trial Volunteers
When you click to import costs from Xero you will be presented with all costs in a claim period that are allowable for R&D, these are:
Your first import may take a little while, please allow a few minutes for this, but when it’s complete you will be presented with a table of these costs.
These costs can be filtered by the Account type. Select the costs you wish to import and then these will appear imported into your claim. Complete the missing data required for an R&D claim and then save, the costs will be shown with a Xero badge so you will know if something is imported or added manually to a claim, and from where.
As you are adding costs to your claim throughout the period you will be able to resync the data with Xero to import any new data into Novel. This process will be much quicker than your first import.
Biotech firm director shares how he leveraged Novel’s educational content to help his team write their first R&D tax relief claim in-house and save money
With R&D tax relief, companies can save up to 33% on their taxes but what does it take? The biggest reason why businesses do not try to file R&D tax relief claims themselves and, instead, hire a specialist agent is because of their lack of knowledge, experience and perceived difficulty. Novel aims to tackle this barrier.
When Lee Sacker, the director of Evergreen Technologies, needed to collaborate with his team to prepare their first R&D tax relief claim, he turned to Novel. Read the case study below where he shares his experience using Novel, some challenges he faced and advice on how to successfully navigate this process.
The challenge– Help Evergreen write a compliant research and development tax relief claim without prior experience and provide a place where multiple users can collaborate.
The outcome – A centralised place for collaboration and record keeping for their R&D projects going forward and a successfully submitted R&D tax relief claim.
The impact – The outcome will help support Evergreen’s operations for on going R&D work and ensure that the process is recorded with maximum efficiency for strong future tax relief claims.
As Lee dials in from Europe with a tan that leaves us pale Londoners a little jealous, we begin tackling the big issue of what it takes to write a technical narrative for a research and development tax relief claim in the field of biotechnology. “I am someone who looks for automation. For things to be as slick and quick as possible and during my search, Novel came up,” says Lee, while Sanela (who is responsible for our marketing) flashes a cheeky smile from across the screen.
The scientific nature of Evergreen’s project meant that they had to work alongside their subcontractor when writing the claim, and, fortunately, “the collaboration aspect of Novel was really, really good”. However, Lee ran into some unexpected problems when trying to get the team to use Novel.
As someone who has heard of and completed R&D tax relief claims before, Lee was quick to understand and was on board to use Novel, but not all of his colleagues shared his enthusiasm for this type of automation. As an entrepreneur and technology business investor with a long history in software development, Lee’s perspective and experience allowed him to successfully introduce this process to some reluctant parties. “I’m massively into these sorts of tools so it’s easy for me, but someone else is just so cautious,” describes Lee. So he found himself explaining that, “this is here to help you, and to make the process easier, and cheaper for the company, it’s not here to pin you against the wall”.
“the collaboration aspect of Novel was really, really good.”
Doing an R&D claim yourself for the first time can be worrying because the tax system is complicated and full of nuances. However, the goal of Novel is to prove that despite the difficult nature of R&D tax reliefs, it can be codified, and, therefore, you can do it yourself. “I totally agree with you,” says Lee, “sometimes people think that they better use company X because they are specialists and they are charging all this money so they must be good but in reality when done with proper education, R&D claims can are pretty straightforward.”
Intriguingly, when building Novel, we recognised that giving users the confidence that they can write their R&D tax relief claim would be a challenge. Lee echoed our thoughts when he started discussing how “some people were worried about writing something wrong”. “I had to make it quite clear to them that this is a collaborative tool, which allows us to get the reports right.”
“this is here to help you, and to make the process easer, and cheaper for the company….”
Speaking of reports, we took this opportunity to ask Lee about his opinion on the fact that we don’t charge our users to download their report, and, instead, give them the flexibility to amend them as many times as necessary. “I think this is valuable and also that Novel doesn’t send it straight to HMRC”, Lee adds. “I could explain to the team that it’s not like you press a button and it goes directly to them. No, you get a report, if you don’t like the look of it, then you press again and get another report until everyone is happy. Only then does it get submitted with the accountants”.
Lee continues that another point of contention was his team asking, “why are we doing this and that we don’t need to write any reports”, in the first place. Although businesses can claim R&D tax relief without any supporting documentation by simply writing down the R&D expenditure number on the CT Return, but “for me”, starts Lee, “I believe in good preparation and forward thinking, therefore even if you don’t need to submit your reports there and then, it’s far more beneficial and easier to create them as you go while it is fresh in your mind rather than waiting a few years down the line for an enquiry. So you are always a step ahead”.
To add to the point above, there appears to be a misconception amongst claimants who think that once the claim is paid out, it’s finalised. Whereas, many don’t realise that HMRC can go back and open an enquiry on your R&D tax relief claim, and therefore you want to have evidence of all the work along the way. “Exactly. The Evergreen projects are only a year old and already it’s difficult to recall some things we did, imagine trying to do this five years later. And what was good is even when we paused for that brief moment, we were always able to go back to Novel, and it’s all there so you can continue where you left off. That works brilliantly.”
“…we were always able to go back to Novel, and it’s all there so you can continue where you left off. That works brilliantly.”
And on that positive note, we got ready to say our goodbyes but before we left, we asked Lee’s advice on what we can do better, his response was “like a lot of these things it has a lot to do with education. You have to educate people to understand the what and the why”. We couldn’t agree more with Lee, and have begun working on some exciting plans for Novel in terms of education, so stay tuned, sign up to the platform or to our newsletter and learn more.
The UK government announced updates to a number of tax policy measures on November 30th as part of the “Tax Administration and Maintenance Day”, in an attempt to modernise the UK’s tax system and combat non-compliance.
The substantive policy changes included:
The inclusion of data and cloud computing costs as an eligible qualifying expenditure category
The clampdown on overseas R&D activities, with emphasis instead placed on incentivising domestic R&D activities
The improvement of compliance within the industry as a whole
In addition to the above, HMRC also made reference to some further policy updates at the Research & Development Communication Forum (RDCF) which was held in early December. After attending the forum and reading through the above policy changes in detail, we have summarised our initial thoughts below.
Data and cloud computing costs
We have spoken at length in another post about the proposed changes to the data and cloud computing costs and what it will mean for businesses so we will only briefly summarise them. If you want to learn more, read our blog post about it here.
Following the changes, businesses will be able to claim R&D tax relief on expenditure that is linked to buying datasets that are directly used for qualifying R&D. However, companies will not be able to claim relief on costs on datasets where the information will be resold or have lasting value to the business beyond the duration of the R&D project. Whilst this definition is made in a similar manner to consumable costs, how this is interpreted in practice is yet to be seen. Data is often consumed during the training of an algorithm and, assuming the project is successful, will have a lasting value within the business if that algorithm is then used commercially.
Staff costs in relation to datasets
Businesses will be able to claim relief on staff-related expenditure for the purpose of collecting, cleansing and analysing data. Although you were already able to claim relief on staff expenditure that is directly tied to the R&D project, the government wants to make their position on this clear in relation to the guidance.
Cloud computing and software
Raw data is often required to be further analysed and modified in order for it to be available for interpretation. The government will now allow businesses to claim relief on the cost of cloud computing services and software used directly for R&D if they are used for computation, data processing and analytics.
Caution needs to be taken though that some software performs more than one function, such as analytics and storage. The scheme specifies that storage does not qualify for relief. The reason that costs relating to servers and data storage are not included is because they are seen as overhead costs, akin to rental costs, which are not considered a qualifying expense for R&D tax relief.
In practice this means that if you use software that incorporates multiple functions such as AWS DynamoDb, which can act both as a storage and analytics tool, the costs need to be apportioned as the business will only be able to claim for the analytics costs. However, for other software, such as AWS Lambda, which is fully used for data processing and analytics, the business will be able to claim the full amount.
Overall, compared to other proposed changes, it appeared that this area had the least debate and questions surrounding it. Most questions focused on two things. Firstly, the practicality of being able to apportion costs of software programmes. Secondly, whether it is reasonable to expect data not to be reused for other purposes and projects. At the RDCF HMRC confirmed that the details are still being finalised which unfortunately didn’t shed any further light on this subject for now.
Overseas R&D relief
This proposed change was one of the two that raised the most follow up questions and concerns. Currently, under the SME R&D tax relief scheme and RDEC, businesses are able to claim relief on R&D activity that is conducted overseas.
However, in an effort to refocus R&D investment and innovation domestically, the government is proposing to limit the relief to R&D activity that has only been undertaken in the UK. This relates to all qualified expenses, such as staff costs, subcontractor costs and EPWs, the only exceptions to costs outsourced overseas were for data, cloud, software, clinical trial volunteers and consumable costs. In addition, if you hire a subcontractor and they rely on overseas staff, relief will only be available on expenditure that has been performed within the UK.
This presents a number of challenges that can be broken down into three questions:
What if R&D must take place overseas, for example, due to regulatory issues in the UK?
How does a company ensure an unconnected subcontractor or staff provider doesn’t engage with overseas workers in delivering their service?
What does this mean for companies that have international subsidiaries?
From the discussions at the RDCF, it appears that HMRC have a rather rigid opinion that most expertise required for R&D work in the UK can also be found in the UK. Whilst this could be true for certain industries such as software development, this isn’t clear cut for others. At the RDCF, an attendee raised the point that sometimes overseas R&D expenditure is required, for example studying climate change that requires staff to be posted abroad near glaciers, or relying on clinical trials to be conducted abroad, much like the case with AstraZeneca and developing the COVID vaccine, where the trials took place in Brazil and South Africa which allowed them to gather more data.
Moreover, in both these cases time and urgency appears to be a factor, which makes one wonder whether taking R&D abroad to expedite the project would qualify for relief. HMRC representatives appeared to respond favourably to these examples although no definitive answer was provided.
During the forum, we tried to ascertain how HMRC suggests companies ensure that the work is carried out by subcontractors whose staff is based within the UK was left unanswered. It will be interesting to see how this works in practice, as it seems unlikely that businesses will be privy to this sort of information from their subcontractors, unless they are connected parties.
Likewise, HMRC confirmed that if the policy changes are implemented as currently planned, this restriction will also impact connected parties or companies that have overseas subsidiaries. Considering that the reason for this change is to ensure that the R&D relief is reinvested back into the UK, not allowing connected companies or companies part of international groups that are owned by a UK tax paying entity to claim relief on overseas expenses may seem counterintuitive to stimulating R&D taking place in the first instance.
Overall, it is still unclear whether this will go into effect and there is scope for this to change as the government is interested in hearing stakeholders’ views and suggestions. If the stakeholders are able to justify overseas expenditure without detracting from the focus on encouraging UK innovation and promoting UK industries, this point may be reconsidered.
There have been some concerns over abuse in relation to the R&D tax relief claims over the past years. Some of the proposed changes to mitigate these issues is to require more information and make all claims digital.
In terms of adding more detail about each R&D project it is hard to tell what effect it will have on the claim process. In practice, it is very difficult to prescribe a set format for the ‘Technical Narrative’ which outlines qualifying work, given R&D could be undertaken in vastly different industries. As of now, the legislation does not require the submission of supporting documentation for an R&D claim. In essence, this means that a claim can be submitted without providing a ‘Technical Narrative’ and instead, the one number is included on the company’s Corporation Tax Return. The government may look to change this in the future and legislate for supporting documentation, though how this is achieved in practice is somewhat speculative at the moment.
Likewise, when asked to clarify what HMRC meant by digital, they said ‘submitted by COTAX or IXBRL’, which could mean that HMRC is aiming to standardise how it is receiving all the information about R&D tax relief and will stop receiving claims through post or email. In the past, HMRC’s willingness to accept CT600 amendments by email has led to delays. It, therefore, seems that the move towards digitalisation will help ensure claims are processed in a timely manner.
In addition to the above-proposed changes, the claims will need to be endorsed by a named senior officer of the business and include the details of any agent who advised in compiling the claim. Ultimately the company is responsible for any R&D claim made by the business, though as it stands no one individual needs to put their weight or credentials against the claim. Again, this is already captured already through the inclusion of ‘Competent Professionals’ on the narratives, though in practice this can sometimes be hard to implement, given that one individual may leave the business.
Similarly, in cases where companies may use a third party R&D consultant to do their claim but their accountants input the R&D figures to a CT return, who would be held responsible? What would accountability actually mean in the eyes of HMRC and where would the line be drawn in terms of responsibility, liability or penalties?
Probably the most divisive change that HMRC proposed was the requirement for companies to notify them in advance if they are planning to make an R&D tax relief claim as it appears to contradict the concept of an uncertainty, hinder startups and is overall incompatible with a company’s statutory right to amend their return. To properly unpack all these concepts, we decided to dedicate a separate blog post to it, which you can read here.
What are the next steps?
The government is encouraging stakeholders to share their views on the proposed changes. They will then publish a draft legislation in the summer of 2022. The draft legislation will then be subject to further debate, before the final changes are included in the 2022-23 Finance Bill. Any eventual changes to the R&D Tax Relief scheme will therefore take effect from April 2023.
To understand why you shouldn’t leave your R&D tax relief claim to the last minute, let’s consider the following example. Robert is a busy entrepreneur who is responsible for his business’ financial success. Robert has heard about research and development tax relief previously but never had the time to fully investigate the possibility of claiming. Although he did know that claiming can help by providing additional cash flow it was never on his priority list to pursue a claim. So what are some things that happen when you delay your claim?
By delaying your claim, you are also delaying your benefit.
The first and most simple point, you are delaying your benefit.
How to submit an R&D claim?
All limited companies have the statutory right to amend their corporation tax returns retrospectively up to two years past the relevant accounting period year end date. This date is the statutory deadline for submitting a research and development claim. The R&D claim is submitted via the corporation tax return form (CT600) by filling out the relevant boxes and attaching the technical narrative PDF as proof of the R&D work carried out.
What are the requirements for submitting a claim?
Before the research and development claim can be submitted, the CT600 has to be prepared. Before the CT600 can be completed the company needs to finalise its statutory accounts as the numbers from the accounts plug in to the CT600.
Delayed preparation and or completion of company accounts and CT600 form are one of the top causes of delay during the R&D claiming process, followed by people answering the necessary questions for the technical narrative of the R&D projects. Ideally, try to avoid having to rush making your R&D tax relief claim as, firstly, it’s stressful, secondly, it doesn’t allow enough time for a thorough R&D cost and narrative evaluation. This could lead to mistakes or certain R&D projects falling through the cracks.
The narrative provides proof of the type and level of research and development activity within the business. Although gathering information and turning this into a good technical narrative takes time and should also be accounted for in the context of submitting a timely R&D claim, if you are recording your R&D as you go along in Novel, this significantly speeds up the process.
Best time to submit a claim
In short, you can submit as soon as all the above required pieces are finalised. It is worth mentioning, that there are certain times throughout the year that are extremely busy for HMRC. Where possible to submit earlier do try to avoid submitting claims in December and March.
The reason for this is because these dates coincide with the calendar year end and the UK’s tax year end, as a result, HMRC tends to be very busy and it may take longer for them to process your R&D tax relief claim, thus delaying your benefit.
Real time tracking of R&D
There are numerous good reasons for tracking the R&D work in real time but one of the most important ones is that it facilitates an expedient delivery of the technical narrative. By keeping track and noting down R&D activity on the go, you are recording more accurate information and are able to go into more detail as it is fresh in your memory. When it comes to writing up the technical narrative at the end of the year, all that is required is editing what is already there without worrying whether any qualifying work has been left out.
Do your next R&D tax relief claim with Novel
Overall, we highly recommend making a timely submission as this can greatly impact your cash flow and support all aspects of your business. You can generate HMRC-compliant R&D tax relief claims without the complexity quickly and efficiently as well as take advantage of a suite of features: education content, financial aggregators and record ongoing R&D all within Novel.
Preparing R&D tax relief claims hasn’t been easier.
Love them or hate them, task lists are a great way to stay organised. We’ve all had that sinking feeling when we realise we didn’t remember to include something important. Forgetting to include an important piece of information could be the difference between having a successful claim or getting an inquiry from HMRC and being refused relief.
There is a lot of important information that needs to be included and we recognised that knowing which details are crucial can sometimes feel overwhelming, and the Tasks tab is there to guide you through it.
The Tasks tab in Novel is a blend between a project management tool and a to-do list, which shows your R&D claim progress and different categories of tasks to ensure you are doing everything correctly. Let’s dive deeper into where to find the Tasks tab in Novel and how to use it.
The Tasks section
1. You can find the Tasks tab in your left hand Navigation
2. This opens up the Taskspage in Novel, where you can see different types of tasks broken down into general tasks and claim specific tasks.
3. Tasks are broken down into Must do and Should do tasks. Must do tasks are all tasks that are necessary in order to submit your R&D tax relief claim. You will not be able to finalise your R&D claim within Novel without completing all the General and claim specific Must do tasks. Should do tasks are a nice addition to your claim and help it be more robust, but they are not required.
Tasks that have already been completed will have a checkmark next to them.
3. General tasks provide an overarching view of your business, such as your company description, field of R&D and UTR. In the case of completing a compliant R&D tax relief claim, these are all required, which is why you see them in the Must do column.
4. Claim specific tasks are broken down further into tasks for two types of users:
Technical User Tasks provides information and explains the R&D activities
Financial User Tasks breaks down the costs that have been incurred in carrying out the work set out by the technical narrative
To learn more about what type of users these are, read our blog here or below.
The benefit of breaking down tasks between technical and financial users is to offer transparency to the claim preparation process by helping the team see what everyone is responsible for inputting into the platform. It also leads towards a more robust R&D tax relief claim because there is little guesswork involved because the users that are required to input the information are the people who have the relevant knowledge or carried out the activity.
Our clients often ask if they can claim their cloud computing or data costs, and up to now the answer has disappointingly been no. But this has finally changed with the government’s announced update to the qualifying expenditure rules, allowing innovators to claim for the cloud computing that enables their work, and the data that powers their projects.
Cloud computing has become vital for many businesses, in tasks such as hosting web applications or training machine learning models, and data is feeding the machine learning models used in many industries. Expensive data has also found applications in fields as diverse as high-fidelity digital twins for cities, modelling wind loads on skyscrapers in wind tunnels, and functional genomics.
What were the rules before?
Prior to the recent announcement, companies have been able to claim for their software and consumables costs. But due to data and cloud computing hardware not being ‘consumed’ during a project or classed as software, these costs have been excluded from the claimable cost categories. This oversight has left the U.K. lagging behind other nations in providing funding for the industries which use data and cloud computing heavily in their R&D; notably in Artificial Intelligence (AI) and BioTechnology.
The definition of software costs in particular has become increasingly outdated, with current legislation designed for a world where software was installed on physical floppy disks and was tied to a single purchase. Modern software is typically downloaded directly from the internet, or accessed remotely through a web application, typically paid via a subscription. This Software as a Service (SaaS) model is treated ambiguously in the legislation, with many clients feeling unable to claim for software that is vital for their R&D projects.
Further complicating the software rules is the rise of Infrastructure as a Service (IaaS)— where users rent servers for compute and storage in the cloud—which does not fall neatly into the category of hardware or software. HMRC’s recent announcement seeks to address this problem by enabling some cloud computing costs to be claimable for R&D relief.
What costs will be claimable after the changes?
The exact details of the qualifying data and cloud costs are yet to be revealed, but HMRC’s published consultation on the subject highlights several examples when data cost may be claimed:
Data cleaning and manipulation
Data storage—tied to cloud costs.
Cloud costs for training machine learning models
Cloud costs used in development phases of software project
Datasets vary in their cost of acquisition, with many being publicly available for free, or can require specialist providers such as in genomics where data is collected from expensive medical samples. The feedback received from HMRC’s consultation on qualifying expenditure suggests that data acquisition costs are likely to be included as a qualifying expenditure, to the extent to which it is part of a larger R&D project.
Often the acquired data is unusable in its raw format, requiring significant resources to transform and clean the data into a format appropriate for the task. HMRC has given little indication of whether the costs associated with this task will qualify—although we would argue that processing data is essential for the R&D project to succeed, and would therefore qualify as an ‘indirectly’ qualifying activity. To learn more about indirectly and directly qualifying activity in a research and development project, click here.
We expect that once an R&D software project has been completed and a commercial product produced, the continuing cloud costs associated with hosting the web platform or storing data will no longer be claimable. Here it will be important to make a distinction between the development phases of a project and the deployment phase—a distinction that does not mesh well with the modern Continuous Integration, Continuous Deployment (CI/CD) method of software development.
Data can be acquired by businesses in several ways, affecting how the costs might be classified. For example a company may set out to gather data themselves, thus incurring a staff cost. Or the company may contract another company to gather the required data, classifying it as a subcontractor cost. HMRC’s consultation also highlighted that a company may also pay for data under a licensing agreement, which enables them to use the data for the specific purpose outlined in the project, after which the data may be deemed as consumed—leading it to be classified as a consumable. In the end, the inclusion of data as a allowable cost may require a new cost category, or an update to the ‘consumables’ or ‘software’ category, to catch the various methods companies may use to acquire data.
Potential Pitfalls and Considerations
The addition of cloud computing to the categories of qualifying expenditure does raise some new questions about the lack of inclusion for non-cloud hardware costs, such as the installation of a company’s own hardware for hosting data or running computations. Whilst capital expenditure does not attract R&D tax relief, there are other incentives on offer such as the recently announced Super Deduction which we expect hardware costs to qualify for.
Datasets that are purchased outright are less simple to classify into existing cost categories, as the data is generally still available for use again after being used, although it may lose much of its utility if the data is time-sensitive. This may require HMRC to deploy a new cost category, rather than shoehorning data costs into the existing cost categories.
The update to the qualifying expenditure rules for cloud and data costs is a significant win for many UK businesses. Although this revision is the correct step forward to ensure that the incentive reflects modern R&D processes, we are still waiting for draft legislation—expected in the 2022-23 Finance Bill—to confirm many implementation details that will determine the success of the proposed update. The changes are expected to take effect from April 2023 and we will continue to update our guidance as more information is published.
To help you decide whether your project qualifies for R&D tax relief, it can be helpful to think about the distinction between a commercial project and an R&D project. Generally speaking, a commercial project is defined at a higher level and encompasses the whole commercial journey from start to finish, whereas an R&D project is a subset of activities that focuses only on resolving the challenging scientific or technological aspects of the commercial project. This also means that just because something is commercially innovative; it doesn’t necessarily qualify for R&D tax relief.
Why is this important?
The purpose of writing the supporting technical narrative is to detail the activities that make up an R&D project. A common mistake is to focus on the commercial project by centering discussions around commercial or business aims and commercial uncertainties. Doing this dilutes the technical narrative with non-qualifying activities and it can even weaken the claim in the face of a HMRC enquiry. This is often the case where key indicators of an R&D project aren’t clearly explained or split out.
However, this doesn’t mean the overarching commercial project shouldn’t be mentioned at all. The commercial aim is ultimately what drives the R&D activity and provides important context as to why the R&D project has come about.
Within Novel, when creating a Project, there are fields where you can add the associated Technological/ScientificUncertainty,Commercial Aim, Advancement Sought and Baseline Knowledge. You will notice that you can add multiple activities but only one uncertainty per project. This ensures that the focus is on compartmentalising a commercial project into the various R&D project(s), rather than allowing for the one project with many uncertainties which may ultimately blur the line between that of a commercial project and that of an R&D project.
Where do we draw the line?
An R&D project can be distinguished by considering what type of activities are taking place. Certain activities simply aren’t regarded as R&D as they do not relate to any scientific or technological aspect of the project. For example, commercially necessary but non-R&D activities include:
· competitor research and analysis
· supply chain & procurement management
· production & logistics
· marketing & sales
For this reason, in Novel, when Creating an Activity, we have a specific list of Activity Types, which are most commonly featured in R&D projects and claims. If this list doesn’t include your activity which you believe goes towards resolving technological or scientific uncertainty, you still have the option to select Other and specify the work in detail.
What are the boundaries for R&D?
R&D starts when a scientific or technological uncertainty is identified and continues until the uncertainty is resolved, or when work aimed at resolving the uncertainty ceases. This work is often referred to as an ‘activity’ and during an R&D project there are two qualifying types of activity:
· directly contributing activities; and
· indirectly contributing activities.
Direct or indirect?
Directly contributing activities are all activities that directly contribute to the resolution of technological or scientific uncertainty. This work is often carried out by those who have hands-on experience with the technology or science at the business, such as engineers, developers and scientists.
Indirectly contributing activities include a multitude of activities which go towards supporting the above directly qualifying activities. A full list can be found within paragraph 31 of the BIS guidelines, though to name a few this includes: feasibility research, HR and Finance support, maintenance of R&D equipment and premises, scientific or technological administration. Note, these activities are only relevant insofar as they support directly qualifying activities, rather than the business as a whole.
Want some more information?
The Novel platform contains many educational pieces which are designed to inform and educate the user on what projects and activities qualify. If you have any questions, either about the educational content or something we haven’t covered, feel free to contact support via Intercom and we will be happy to help.
Novel R&D tax relief software is a web-based application. This means that it can be viewed and run on Windows and Mac computers with the latest versions of Chrome, Safari, Firefox, Microsoft Edge and Opera browsers.
Novel does not need to be downloaded onto the computer and can be accessed anywhere with an internet connection from a web browser. It is hosted on a secure cloud server to ensure that it offers both privacy and flexibility.
In order to unlock the features of Novel you have to add an organisation. This will allow the system to automatically populate the relevant accounting periods so you can get started creating your R&D tax relief claims. Follow the steps below to add an organisation in Novel.
Under the Create Organisation, in the field where it says ‘Search Companies House’, write out either the name the company is registered as on Companies House or the Company Number. Give it 5-10 seconds to load. A field should appear under with the name of the company, click on it.
2. Next click the field with your company name, which will expand and show the Current Accounting Period and Previous Accounting Period. To proceed further, click on the Confirm Organisation Details button.
3. Once you Confirm Organisation Details you will gain access to the platform and your 3 month trial period will commence.