We have advised clients from across a wide range of sectors on R&D tax claims, so we know that it’s easy for clients outside of industries such as chemical engineering or manufacturing to discount their work as non-R&D.
This is a particular challenge for ‘fringe’ sectors, where work may well come under the umbrella of R&D, but there may also be a reasonable case against its eligibility for the scheme.
Digital communication is one such sector, particularly with the rise of artificial intelligence (AI) and remote working making portal devices a necessity.
Innovations in communication
Communication has been a significant area of focus for R&D in recent years, with the introduction of newer and more powerful devices, widespread access to 5G and the use of AI chatbots to speak with brand customers.
We’ve seen a wide range of new developments, as well as innovative applications of existing technologies – and therein lies the challenge.
To qualify for R&D tax relief, a project must:
- Sit within the fields of science and/or technology
- Be original and not an application of an existing technology or product
- Seek to overcome or address an uncertainty in its field.
While many digital communication developments meet one or more of these criteria, it can be difficult to ascertain when a project meets all three and becomes potentially eligible for R&D tax relief.
Advising the telecoms sector
By its nature, the majority of R&D in the digital communications sector meets the criteria of science or technology. Most of the developments in this field concerns complex technologies such as communication devices.
However, establishing whether they are truly new and innovative can be challenging.
In cases like these, it’s especially important for your client to discuss their work with you and work through the process of the project.
This will help you to identify work that meet the originality criteria of a successful R&D tax claim before putting it together – which will also support the technical narrative and help to reduce any potential opening for an enquiry.
The future of the sector
From an R&D perspective, it’s likely that we’ll see a growth in the digital communications industry in the future.
The world is an increasingly digital one. For that, we need consistent development and evolution in the way we communicate with one another.
However, that same evolution could create a point of difficulty for you and your clients going forward as originality becomes harder to spot.
To avoid this issue, make sure to engage with support from the specialists and prepare for a claim in plenty of time.
Don’t hesitate to contact our advisory team today if you’re advising a telecoms client and need some R&D tax support!
