The updated creative industry guidance has arrived – How can innovative companies make the most of it?

After a long wait, HMRC have finally updated CIRD81300 to better reflect how innovative companies working in creative industries can better approach R&D tax relief claims.

As this has often been seen as quite a murky area of R&D tax reliefs, it is worth understanding how to handle innovation in creative industries.

What has been updated with the guidance?

While the guidance itself has not changed, it does now include some worked examples of how interdisciplinary R&D projects could be handled.

HMRC have highlighted the way in which the innovation of creating a virtual costume simulation and a real-time immersive racing experience.

In both instances, it is apparent that the innovation is within the technology itself rather than any aesthetic aspect.

This is not new information, but the update to the guidance has once again shown HMRC’s commitment to supporting advances from previously underrepresented sectors.

What is more helpful is knowing that R&D tax relief claims of this nature must be claimed only as an R&D tax relief claim and not Film Tax Relief (FTR), Audio-Visual Expenditure Credit (AVEC) or the Creative Industry Tax Relief (CITR).

This will also be the case even if a project does qualify for FTR, AVEC, or CITR, so it will be necessary to determine the best relief for the specific project.

How will the updated guidance help future R&D tax relief claims?

Knowing that FTR, AVEC and CITR claims may render a project ineligible for R&D tax relief claims means that innovative businesses can better plan their course of relief to best match the qualifying expenditure.

It will therefore be necessary to calculate the potential relief that can be claimed through the various schemes.

To do this, compiling evidence throughout the course of the R&D work can be used to better determine the correct way to claim relief.

What is most likely to be the biggest impact of the updated guidance is to better manage any enquiries that are launched into an R&D tax relief claim.

Despite the updated guidance, it can still be expected that HMRC will continue to challenge R&D tax relief claims from creative industries.

However, it can be hoped that innovative businesses have the confidence to submit their R&D tax relief claims when they have done something truly innovative.

As R&D tax consultants, we can help accountants and innovative businesses know which parts of a project would qualify for R&D tax relief.

This advice can ensure that the correct relief is sought and that true innovation is rewarded, regardless of what sector it comes from.

There have been major advances in technology spurred on by the needs of the entertainment industry, so it is time that the work done to make that possible is recognised.

Speak to our team today for expert R&D tax relief support across a full range of sectors.

Adam Bointon