What is the Role of R&D Tax Relief for Innovative Companies within Civil Engineering?

Civil Engineering is a sector that we rarely consider in our day to day lives, especially in the context of innovation. However, it is an area that is fundamental to any developed society, providing us with the essential services that we rely on, such as effective transportation networks and reliable access to the utilities that we take for granted.

Broad in nature, the discipline of Civil Engineering includes areas such as:

• Structural engineering, focusing on the construction of large structures including bridges and dams.
• Geotechnical engineering which looks at the interaction between ground conditions and man‑made developments.
• Water resource engineering which involves the supply of fresh water nationally and the management of unwanted sewage and flood waters.
• Environmental engineering, encompassing projects that are angled at environmental protection by way of mechanisms such as the reduction of emissions and more responsible waste management.
• Material engineering which focuses on the effective selection and use of materials in both infrastructure and construction projects.

Although Civil Engineering is often missing from conversations regarding R&D, innovation within the field is integral to society’s progress towards commonly accepted goals such as sustainability, enhanced connectivity, and generally improved quality of life. Consequently, developments within the sector naturally trend in similar directions with significant efforts targeted at reducing embodied carbon through improved material use, developing new processes that are more sympathetic to the natural environment, and improving the functionality of services that are traditionally basic. The UK specifically relies heavily on legacy infrastructure that may have been cutting edge in the past but has since fallen behind the modern standards and into disrepair. There has been considerable work in recent years to bring this infrastructure in line with evolving demands while maintaining its cultural heritage, to achieve these ever-shifting objectives, continuous innovation in this field has been required.

The purpose of the UK government’s R&D Tax Relief scheme is to both reward and incentivise companies that are engaged in activities that seek to advance their field of science or technology. HMRC are aware that companies take on a significant degree of financial and technical risk when investing in R&D activities and hence the scheme is based on expenditure in this endeavour. For companies within the Civil Engineering space this means that they may be able to benefit from tax relief proportionate to their staff time, subcontracting cost, materials spend, and other specified expenditure associated with innovative projects that fit HMRC’s definition for R&D.

Due to the significant costs that Civil Engineering companies can incur on their projects through both design and construction, it is easy to see how they are in an ideal position to take advantage of the relief where applicable. This can result in either a reduction of tax payable or even a tax credit depending on the specifics of the company. Either way, this can be a huge boost in an industry where ‘cash is king’.

However, this relief is not given out automatically. Companies are required to make a deliberate claim in the form of a complex report that outlines why their work qualifies for the relief and how much they have spent on this within the specified cost categories. This is where a specialist R&D adviser can be an asset for companies on the cutting edge of their field. Using their understanding of specialist fields and the complex legislation surrounding R&D tax they can take this work out of their client’s hands to compile a report that ensured they take advantage of all the relief that they are entitled to whilst minimising the risk of HMRC enquiry.

At RCK Partners there is an experienced team of R&D Tax Consultants and Compliance Officers that are ideally placed to guide Civil Engineering companies though the R&D tax relief claim process, allowing them to take full advantage of the relief that they are entitled to in a manner that allows them to continue with their innovative work that improves all our lives.

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