One of the risks that comes from underestimating the amount of R&D that is done in the food and beverage sector is that it can often cause efforts to combat real challenges like food waste to be overlooked.
Despite there being widespread hunger throughout the world, there is an ongoing problem with the amount of food waste that is generated every year and extending the shelf life of foods is one of the ways this can be reduced.
As R&D tax consultants, we want to spread a greater awareness of how different sectors can benefit from R&D tax reliefs to continue doing innovative work.
We understand that work in the food and beverage sector can be vital for tackling real issues and can therefore qualify for R&D tax relief if the claim is properly assessed and handled.
How does extending the shelf life of foods count as R&D?
When doing the weekly shop, who among us has not rummaged to the back of the shelf for the item with the longer sell-by date on it?
While some people religiously follow the sell-by or use-by dates assigned to food, others prefer to rely on the sniff test but there is little denying that shelf life plays a significant role in our relationship with food.
Part of the big problem of food waste is people throwing out food that could be eaten if it had a better use-by date on it, or people buying too much food and not getting to use it all before it spoils.
Both of these issues stem from the limited shelf life that many products still have.
While the concept of extending the shelf life of a food is well understood in isolation, there is still a large amount of uncertainty surrounding how it can be done in a way that does not result in an inferior or unusable product.
Salt and alcohol are great preservatives, but are not going to be well received in yoghurts aimed at toddlers.
Purification processes are often the place where R&D occurs within the food and beverage sector.
This is due to the issue of balancing commercial viability with food preservation being a constant factor in purification.
Sterilisation and pasteurisation risk removing healthy bacteria and nutrients at the same time as they rid the food of the harmful bacteria that will cause it to spoil.
While commercial consideration is not often the forefront of an R&D tax relief claim, food and drink need to meet certain nutrition and taste criteria before it is considered fit for human consumption.
As such, refinements to the purification process must not negatively impact the overall quality of the food.
Advances in packaging are often overlooked when conducting R&D in the food and beverage sector.
Anti-bacterial or anti-microbial packaging can often extend the shelf life of products, or unique designs that can indicate when the food is fit for consumption, could all be considered valid avenues for R&D if they involve a notable amount of technical uncertainty.
All of these measures go towards resolving a major issue with the way that food is consumed, or not consumed, and all must be balanced with the economic pressures that require preparation and packaging costs to be kept low.
How can extending the shelf life of foods be discussed in an R&D tax relief claim?
If your business has been doing work to extend the shelf life of foods, you need to be able to explain the reasoning behind the process in simple terms.
Though you have at least one competent professional who understands the complexity of the challenge, HM Revenue and Customs (HMRC) is not staffed by experts in every sector, so they need to be able to understand the advance.
Importantly, discussions of the exact recipe of a food are likely best avoided unless there is something truly revolutionary in terms of the science or technology without which the recipe would have been impossible.
Instead, the focus needs to be placed on the innovative processes that allow the mission of extending the shelf life to be met without making an inferior product.
Examples or testing and trialling different purification processes or packaging should be well documented, as well as the expectation of how they may have worked.
It is worth remembering that R&D tax relief claims have historically been beset by bad actors looking to erroneously claim funds to which they are not entitled.
In response, HMRC have introduced the Mandatory Random Enquiry Programme (MREP) to go alongside the traditional review process that could see your R&D tax relief claim met with additional scrutiny.
We defend any eligible claim from enquiries, but this is aided by evidence provided by innovative businesses like yours.
