Innovation is at the heart of boundary-pushing architecture. To stay competitive, architects must balance functionality, aesthetics, and budget in their design plan whilst leveraging recent technological advancements.  

The R&D tax relief scheme incentivises architects to develop revolutionary solutions and embrace innovation. The tax relief can offer significant funds to invest in cutting-edge technologies and innovative methodologies, driving the growth of your practice. However, many boundary-pushing architects miss out on R&D tax relief due to confusion over what qualifies.  

To help you navigate the R&D tax relief landscape for architects, we’ve created our guide outlining essential do’s and don’ts to submit a fully compliant and maximised R&D claim.

Do’s:

• Maintain good project documentation

Record keeping is essential for a robust R&D claim. Detailed, contemporaneous documentation of your R&D work is crucial. This includes project briefs, technical drawings, meeting notes, and internal project documentation. Such records can provide clear evidence of your R&D efforts, strengthening your claim and facilitating any HMRC enquiries. By developing diligent record-keeping practices from the outset, you streamline the claim process and can maximise potential R&D tax relief.  

• Identify R&D activities within your project

Be proactive in recognising R&D activities within your projects. You should clearly define what makes your project unique. Document innovations, such as overcoming technical challenges, using new materials, or developing efficient design processes. Highlight the project’s distinctive features or environmental benefits. Identify boundary-pushing activities, which will be key factors in demonstrating a qualifying project.  

• Quantify your costs

Keep detailed records of all expenses directly linked to your R&D activities. Use timesheets or project logs to track the time spent by relevant personnel involved in R&D activities, separating out R&D activities and routine work. Record the cost of any material, consumable, or software used for R&D purposes. Keep detailed documentation to support your cost calculations with invoices, receipts, contracts, and project logs that clearly link expenses to specific R&D activities

• Include ancillary activities in your R&D claim  

It is a common misconception that ancillary activities cannot be included in an architectural claim. However, if they meet the criteria to qualify under the scheme, there are no reasons why these can’t be included. Pre-construction activities such as site suitability analysis, master planning, feasibility studies can be picked up. In the design and construction phase, activities such as building code compliance and building service engineering can be included.

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Don’ts:

• Assume all architectural work qualifies  

Not all aspects of your architectural projects will involve R&D. Even if a project has been eligible in prior claim periods, you will need to evaluate whether the current work deviates from standard practices and involves overcoming technical uncertainties. Don’t assume that the eligibility criteria applied to one phase of a project will automatically apply to others. Each claim should be tailored to the specifics of the project, so you must adjust your approach to capture all qualifying activities and avoid submitting claims for non-qualifying work. Ensure you regularly review you claim methodology and undertake assessment strategies during each stage of the project.  

• Submit a claim if you’re an LLP

Traditionally, many architectural practices have operated as LLPs (Limited Liability Partnerships). However, LLPs are generally ineligible for R&D tax credit relief as this benefit is reserved for companies subject to corporation tax. If you are considering splitting activities between an LLP and limited company to qualify for R&D tax credits, it is crucial to ensure that the arrangement has genuine substance. HMRC closely scrutinises the relationship between a firm’s LLP and associated limited companies.  

• Forget to review third-party contracts

For accounting periods beginning on or after 1 April 2024, changes to the R&D scheme will impact how contracted-out costs are handled. Under the new rules, both SME’s and large companies can claim R&D tax relief, provided they are the party responsible for deciding to undertake R&D work. This means that either the customer or the subcontractor can claim for contracted-out R&D if they “intended or contemplated” that R&D activities would take place. Therefore, if you are seeking to make an R&D claim, it’s essential to review all third-party contracts thoroughly, as the terms and language used are critical in determining your eligibility for tax relief.

• Forget to submit the Claim Notification Form

A common pitfall in the R&D scheme is claimants failing to submit the claim notification form, ultimately causing them to miss out on valuable R&D tax relief. This mistake is often caused by confusion around the claim process or deadlines. For instance, businesses that haven’t claimed in a while may mistakenly believe they have two years from their year-end to submit a claim. However, the claim notification form deadline is significantly shorter, making it easy to miss. In addition, new companies may delay their accounts or CT filings until close to the statutory deadlines, only to discover it’s too late to submit the claim notification form. To avoid any unpleasant surprises, we advise submitting the claim notification form during the claim period, even if you’re unsure about the final outcome of your R&D activities. It's better to be safe than risk having your entire claim rejected.

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How we can help

Here at Folio Partners, our service goes beyond simply processing claims. We will work closely with you to identify and document qualifying R&D activities within your claim. This collaborative approach ensures a comprehensive and accurate claim that reflects your firm's projects. Our team will then prepare a detailed, robust R&D report which provides a clear breakdown of your claim. Ultimately, our aim is to ensure that your claim is compliant with HMRC’s needs and that the submission process is as smooth as possible. Contact us to learn how we can support your R&D claim submission for your architectural practice.