Can chemical use in textiles be counted as R&D?

Those working in the textile industry often find that the R&D they do is not easily understood by HMRC.

It can be challenging for innovative businesses and accountants who try to help them to make the most of R&D tax relief claims when so much of the work can be overlooked.

As R&D tax consultants, we want to focus on some of the ways that true innovation manifests in the textile sector.

Why is the use of chemicals important in the textile sector?

Chemicals have long been a part of the textile sector in order to increase the longevity of products or to alter their fundamental characteristics.

This might involve finding dyes and finishes that allow for the product to be given new colours to make it more appealing.

Chemical processes can also soften materials to make them more malleable and also enhance their strength to improve durability.

However, it is not simply a case of using the same chemical compositions across all items.

Different materials react in different ways to chemicals and it does take some scientific knowledge to find a workable solution that will not damage the material that is being used.

While aesthetic changes cannot be considered part of R&D, dyeing materials is not automatically excluded from an R&D tax relief claim provided that it involves some degree of uncertainty.

Dyeing different colours is not a simple process and it can take complete reworkings of chemical compositions to achieve this seemingly easy task.

Each colour represents a different challenge, as the chemicals required to achieve it may have a negative impact on the material.

For instance, no one would want to buy a red handbag if the green handbag costs the same and lasts twice as long.

As such, it is not uncommon for chemical use in textiles to undergo intensive R&D work.

This is further compounded by efforts to make these processes more sustainable, which could see a reduction or removal of synthetic substances in favour of natural ones.

Natural materials may react differently to chemicals and generally are less uniform than artificial materials.

This can lead to further uncertainty when attempting to create repeatable processes.

How can chemical use in textiles be represented in R&D tax relief claims?

The most vital thing to establish is that the work does genuinely seek to resolve an uncertainty.

While the desire to dye a product may be born from commercial or aesthetic reasoning, the act of developing the process is a scientific pursuit.

As such, focus should be kept firmly on the scientific process rather than the commercial reasoning behind the project.

This also means excluding market research from discussions, even if that informed the colour that is being sought with the dye.

As R&D tax consultants, we can help innovative businesses from a range of sectors capture their R&D effectively.

We help HMRC understand why the work that is done is innovative and can defend from enquiries should they arise.

To approach R&D tax relief claims from the textile sector with confidence, speak to our team today.

Adam Bointon