Innovation is a truly cutthroat world.
Whether it is the Space Race or the battle between Edison and Tesla, there have always been parties competing to be the first to crack something truly innovative.
The reality of the situation is that if your client has noticed a gap in the sector, someone else may have also noticed it.
There is nothing more disheartening than to discover, having invested time and money into an innovative project, that someone else has released the innovation before your client’s can get out of the gate.
Is that project now completely dead in the water?
Can the hard work and effort put into still be recuperated?
Is a claim possible in a situation like this?
Project eligibility
There is no denying that a claim will become harder to make if another company have successfully made an innovation comparable to the one made by your client.
In all likelihood, that company may very well file their own R&D tax claim to recoup some of the cost of that innovative project.
To answer the question of whether your client’s project is eligible, we must review the criteria for eligibility:
- The advance is significant in the sector.
- It cannot be readily deduced by a competent professional.
- There was some degree of technical uncertainty.
- Work was conducted on the project during the financial year.
It is worth noting that none of the criteria are automatically invalidated if another company succeeds ahead of your client.
The main driving factor in this instance would be knowledge of work conducted in the sector.
As most R&D work is subject to non-disclosure agreements, the likelihood of a company broadcasting exactly what uncertainties they are working to resolve and how they seek to resolve them are very low.
The advance must surely be a significant one in the sector if more than one company felt compelled to address it.
Provided that your client can demonstrate that their project was masterminded by competent professionals for whom the answer was not immediately apparent, then this would remain a qualifying factor.
Even if another company resolved the same technical uncertainty as your client, they are unlikely to have done it in the same way.
The fact that the approaches will differ should be evidence that the solution was not readily deducible to a competent professional.
If your client actually conducted work before the other company’s work became public, or sector wide, knowledge, then that work would remain eligible.
Increased chance of rejection
The presence of a comparable project will undoubtedly increase the chance of your client facing an enquiry.
This will be especially true if their claim is filed after the work becomes public, or sector wide, knowledge and more so if a claim has been filed by the other company.
The onus will then be on proving that the work conducted by the other company was not known to the client and that both parties independently sought to resolve a technical uncertainty.
Good record keeping on the part of your client can help when evidencing such claims as meeting minutes and financial records can demonstrate when work was carried out.
If your client can prove that they worked on the project while a solution was still not know to competent professionals, there should be no issue of filing a claim for at least part of the project.
Only work carried out after the solution became public knowledge would risk being ineligible unless your client’s work still constitutes an advance regardless of the work of the other company.
This could be determined by whether your client’s solution is more efficient, for example, than the solution devised by the rival company.
Ultimately, both claims, your client’s and their rival’s, will have to stand on the merit of their own eligibility.
For further guidance and advice on supporting your client’s R&D claim, contact us today!
