Why Architects are missing out on claiming R&D tax relief
Although we may not realise it, architecture is an important part of how we live. The design and structure of a building shapes our experience of home, work and community life. It’s no surprise, then, that architecture is an industry that is continuously evolving and innovating. Whether it’s the development of buildings with better ecological credentials or advances in 3D printing for use in the sector, more is becoming possible with every passing year.
With all the innovation that occurs as part of everyday work in architecture, it’s surprising that more firms aren’t claiming R&D tax relief. Here, we take a look at why, when it comes to R&D, architects often don’t reap the rewards they’re due.
Why architects aren’t claiming
- Lack of awareness
The chief reason many architectural firms aren’t seeking tax relief is that they are unaware that what they do constitutes R&D. Architects, however, carry out a range of tasks that could qualify, including:
- Using civil engineering to overcome geographical obstacles
- Creating enhanced structural designs to be used in new environments
- Identifying design constraints and developing solutions
The above activities and more mean that, in many cases, tax deductions for architects are available, so long as the firm is aiming to achieve an advancement in scientific or technological knowledge that could benefit the wider industry.
- LLP structuring
Another reason architects may not be claiming is that traditionally they have taken an LLP structure, and as such weren’t liable for corporation tax. R&D tax credits are used against a company’s UK corporation tax bill, and as such can’t be awarded to LLPs. When changes came into effect regarding taxation rates, however, some firms became Limited Companies and therefore eligible for the relief. These companies could benefit hugely from the available research and development tax credit for architects; it’s possible to claim for R&D expenditure for up to two years before the current accounting period.
- Lack of a dedicated R&D team
It’s thought by some firms that R&D tax credits can only be claimed for if they have a dedicated research and development team. This is not the case. As far as HMRC is concerned, as long as a competent professional in the field would not be able to find a solution without overstretching themselves and their resources, R&D tax relief is likely to be awarded.
All that is needed is supporting documentation that shows expenditure has been made directly on the R&D project. Qualifying costs could include staff salaries, subcontractor costs and expenditure on consumables among others.
Claim R&D tax relief
If your architectural firm could be eligible for R&D tax relief, get in touch with the team at R&D Tax Solutions in Manchester today. We specialise in helping businesses in the architectural sector to identify projects that are eligible for tax credits and make a successful claim. Contact us today on 0161 298 1010 or email office@rndtax.co.uk to find out if we can help.