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Given the challenges that face innovative businesses and the accountants that want to assist them when compiling an R&D tax relief claim, it is little wonder that some sectors get overlooked.
Many may dismiss the food and beverage sector as a place where only recipes are tweaked slightly to make things tastier.
This is not universally true and plenty of valid R&D work takes place in this sector.
In particular, work done to improve the quality of packaging should not be overlooked, given the major impact it can have on the sector.
Why might work to improve packaging count as R&D?
Al packaging requires an element of scientific and technological concern to ensure that it is suitable and fit for purpose.
The most common challenges that come with packaging are ensuring that it is durable enough to perform the desired task without becoming too bulky, heavy or cost-prohibitive.
In the food and beverage sector, this issue is further complicated by the need to preserve and protect the more volatile contents within.
Food waste is a significant ongoing problem and improper packaging can make this problem worse, as tearing or damage can cause foodstuff to become unsafe and not fit for consumption.
Similarly, packaging in the food and beverage sector needs to be carefully designed to not react to or with the contents within.
Chemicals need to be selected carefully to not taint the product within and make it unsafe for consumption.
The packaging may also need to endure sterilisation techniques or refrigeration, which can threaten the integrity of the packaging if not adequately accounted for.
How can R&D with packaging be managed in an R&D tax relief claim?
When detailing advances with packaging in the food and beverage sector, it is vital to draw a clear distinction between routine work and genuine advances.
It is not possible to include any work done for commercial or aesthetic reasons in an R&D tax relief claim.
This means redesigning the logo or changing the shape and style of packaging for purely cosmetic reasons will not be valid.
When the modifications to packaging do count as genuine R&D, it will be important to establish the existing state of packaging as well as the issue that was being addressed.
It may be worth focusing on whether the R&D is designed to make the packaging more sustainable or is aimed at enhancing the shelf life of the product within.
Having a competent professional involved in the creation of the R&D tax relief claim can help accountants discern how the R&D was genuinely innovative.
All of these factors can be accurately reflected in the technical narrative that is a vital part of an R&D tax relief claim.
Through this, HMRC can understand the validity of the R&D project and assess it accordingly.
As R&D tax consultants, we work alongside those involved in the R&D to gain a deeper understanding of what is being attempted.
This lets us present the information in a way that is understandable to HMRC and reduces the risk of enquiries.
As the food and beverage sector is not a sector that HMRC views as being inherently scientific, there is an increased chance of R&D tax relief claims being met with enquiries.
When this happens, we work to defend R&D tax relief claims to preserve the full valid amount of relief.
Speak to our team to find an effective way to present R&D in the food and beverage sector.
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