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R&D Claims made in Biotech & Chemicals Development


People are often confused and look for development that is only “new” or “unique” – this is NOT the right approach.

Qualifying research and development activities can be more than simply an ‘end product’ or service; a technological advance, for R&D tax purposes, can be defined as a project that is seeking to create  appreciably improved:

  • Methodologies,
  • Techniques,
  • Technical processes,
  • Materials,
  • Devices.

Furthermore, work that seeks to duplicate the effect of a solution in one environment, and adapt it for another platform or environment, or even seek to improve it in this process, can also qualify as R&D for tax purposes.

Example
We have recently worked on claims for a company that specialises in developing accurate and robust analytical processes for materials treatment, testing and analysis for a wide range of highly specialised industries. These processes are also known as ‘assays’, which can be used to meet the most demanding of legislative requirements. Though legislation defines the minimum deliverable for the end solution, it does not define the processes that need to be developed in order to prepare a material for analysis, or how to test/analyse/detect highly specialised materials, compounds or chemicals.

One of the main premises to the R&D activities was that certain standardised and theoretical methodologies already existed for a limited number of contaminants, however, it is not readily deducible how to:

  • Adapt an assay to work in another environment, application or industry.
  • Develop assays for unique and real environments. For example, real soil samples do not have the consistency or composition of laboratory composed samples.
  • Adapt assays for laboratory equipment that was originally developed for other industries, ie. medicine.
  • Develop an assay to work faster or more effectively.
  • Create a more robust or reliable outcome.
  • Increase accuracy and precision.
  • Increase the speed of the end-to-end process.
  • Reduce the operating costs of detection, quantification, and analysis.
  • Generate greater analytic capabilities.
  • Introduce automation.
  • Increase scalability.

By the same token, it is rarely possible to simply apply an off-the-shelf standard to the type of assay work that the company undertook, given the unique requirements of their clients, operating environments, samples and bespoke laboratory equipment.

The guidelines state that you must have a project that is seeking a technological “advance”, and must be resolving scientific or technological uncertainties in an attempt to reach the end goal. In the context of this example, failed assay development would be an excellent example of a qualifying project, evidenced by the fact that the company was not able to resolve the scientific uncertainties.

Scientific and technological advances sought in the projects in this example were in the fields of materials science, chemical analysis and biochemical analysis.

The advance in this example relates to the that fact that the company sought to develop and further develop assays, methodologies and improved specialist hardware in order to advance operating capabilities. The scope of the development also pushed existing boundaries to enable to assays to be applicable to operate in different and more challenging environments, with a performance and accuracy that exceeded comparable development benchmarks.