The pharmaceutical industry spans a range of sub sectors, all of which may benefit from Pharmaceutical R&D Tax Credit. These include:
- Drug discovery
- Device development
- Manufacturing of drugs and devices
- Manufacturing process optimisations
- Developing Anti-counterfeiting measures
- Adaption of drugs to widen the market, e.g. using materials suitable for vegans.
The industry spans human and all other living creatures in need of drugs or intervention.
Significant regulation surrounds the Pharma Industry. As a result it is often the case that trusted companies work together in the development and supply chain. Starting at research, to the theoretical application and development of technology to bring the concept into existence. Therefore the possibility of a Pharmaceutical R&D Tax Credit arises at all stages of the process to the point of delivery.
It is this tight knit chain that can lead many companies to not claim R&D tax relief. There is often a lack of understanding as to who can claim in this chain. More often than not, the middle-link in the wider project, the subcontracting company is eligible to make the claim.
HMRC recognize that drug discovery has many phases. In many ways some phases are not R&D in the traditional sense, yet the costs incurred can still qualify for relief. For example testing and analysing results.
The typical new drug discovery and development process consists of four stages, all of which may qualify for R&D tax relief:
- Drug Discovery – discovery of new compounds are including drug synthesis, biological testing and toxicology studies.
- Pre-Clinical Development – conducting laboratory tests in vitro and on live animal subjects. This phase aims to further establish properties and effects.
- Clinical Development – testing of potential drugs on humans and split by HMRC’s manuals into 3 phases.
- Post Launch – referring to post launch activities and monitoring.
Pharmaceutical R&D Tax Credit
When looking at drug discovery it is not just the scientists’ costs which can be claimed under the R&D Tax Credit Pharma regime, payments to Clinical Trial Volunteers can also be included in the qualifying costs.
To substantiate R&D expenses and where the qualifying activity lies in the chain of development and supply, it is key that a deep understanding of the project and tax law are brought together in unison. That’s why it is highly recommended to partner with an R&D specialist such as our team to reduce the burden of the claim and maximise the benefit without jeopardizing the claim.