How subcontracted R&D can be claimed for in construction projects

In the construction industry, innovation and inventive solutions are key to staying competitive. However, undertaking R&D activities can be expensive and time-consuming, leading many companies to hire subcontractors to complete the work. The good news is that these costs can be claimed for in R&D tax credit applications.

Subcontracted R&D is a common practice in the construction industry, and it can cover a range of activities, including designing new products, developing new processes, and researching new materials. When subcontracting R&D work, it is important to ensure that the subcontractor is qualified and experienced in the relevant field, and that the work is clearly defined and meets the requirements for R&D tax credit claims.

To claim for subcontracted R&D, the costs must be directly related to the R&D project and must be incurred during the accounting period in which the R&D project is carried out. The amount that can be claimed is 65% of what was paid to the subcontractor for the R&D work.

It is important to note that the 65% figure only applies to qualifying R&D expenditures, and not to any general subcontractor fees or expenses. It is also worth noting that the subcontractor cannot be connected to the company claiming the R&D tax credits, such as a subsidiary or parent company.

To claim for subcontracted R&D in a construction project, the company must provide evidence of the R&D work completed by the subcontractor, such as invoices, contracts, and technical reports. It is also important to keep accurate records of the time and costs associated with the project.

In conclusion, subcontracted R&D can be a valuable way for construction companies to undertake innovative and inventive solutions while managing costs. By claiming for these costs in R&D tax credit applications, companies can maximise their tax relief and reinvest in further R&D activities.