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R&D Tax and Architectural Practice

Architecture, as a practice, often bridges the worlds of both art and science, and while many architects will focus on one of these areas over another, many others are also ‘generalists’ who operate across both fields with equal skill.

A reality will often be that greater fees are generated from projects that have more significant scientific or technological challenges, over the ones that are mainly focused on a direction in art, aesthetics, or creativity. The risk and time associated with resolving certain scientific or technological challenges can be substantial, as too can the financial benefits when these problems are realised to potentially form major Intellectual Property. Therefore, it can be wise for an architect to invest in R&D.  However, scientific or technological challenges on their own do not make for qualifying R&D activities, as per the BEIS Guidelines.

We must be careful to separate the art from the science, along with the more routine and technical aspects of an architect’s role.

How to achieve a certain aesthetic can sometimes (but not always) require problems to be solved concerning the science of engineering, structural engineering and/or even materials science. This work can involve addressing uncertainties in terms of how to move from a theoretical design, to now develop the design concept into a real world, robust, safe, and compliant solution.  However, this type of uncertainty does not immediately qualify the work as ‘R&D-for-tax-purposes’ – which will be explained further next.

It can often be the case that the line between the role of an architect and (for example) a structural engineer can blur considerably.

Typical architectural projects will involve standard engineering considerations – like load bearing calculations, the need for specialist equipment, or the need to understand complicated building standards. This work could indeed be highly complex and specialised but would be unlikely to qualify if the scope was an implementation of known techniques, standard science or routine engineering practices.

It may be the case that a certain type of aesthetic being sought, or the project requirements mean that standard or routine solutions, or an off-the-shelf approach, could not be applicable or readily adaptable to deliver a viable solution – which in turn generates ‘technological and or scientific uncertainty’. But what is ‘technological and or scientific uncertainty’? This is often demonstrable by the fact that iterative development has taken place, along with testing, possible failures, prototyping, and so on.

At high level – for there to be a qualifying R&D project – there needs to be a problem or an innovation goal that needs to be resolved, and standard technologies or known methods will not deliver the solution.

It may be the case, for example, that standard building practices or regulations cannot be applied. A good example of this has been the emerging science behind ‘charring’ and fire control following the catastrophic Grenfell incident.

Example – Wooden structures for tall buildings

The proponents of tall timber have spent the best part of a decade talking down the combustible nature of timber. We are told that there is ‘a common misconception about timber is that it is more susceptible to fire than other materials’; that ‘it’s a very hard material to light’; that it exhibits ‘charring rather than going up in flame’; and that ‘it burns in a very predictable fashion’. While there is some truth in these statements – the authors could make counter arguments: wood can be ‘ignited relatively easily’; ‘mechanically, timber performs worse than steel or concrete at high temperature; in some cases, exposed surfaces do ‘not extinguish’. In each case, the performance of timber construction depends entirely on the context. It could perhaps be argued that simplistic messaging was necessary to overcome misconceptions, and to open the minds of non-specialists to the possibilities of mass timber construction in an industry which has been historically predisposed towards non-combustible forms of construction.

A case in point was Bridport House, where a Registered Architect explained that:

‘we challenged the residents to set a big piece of Cross Laminated Timber (‘CLT’) on fire. Which they duly tried and didn’t succeed. From that point on CLT was accepted as the best way to make the main part of the building’. 

For the same project, a contractor’s site manager was quoted as saying:

‘cross-laminated timber is a massive timber material that does not bear extra risk in the case of fire. The outer parts would char, protecting the bulk of the material and bringing no danger of structural collapse’. 

It could perhaps be assumed that behind the simplistic messaging, designers were – in fact –systematically identifying and addressing the new hazards. In fact, this study raises serious new concerns and alarm, where charred materials can break up and in certain circumstances create greater fire load.

Bridport House also serves as an unfortunate case study. It has recently been reported that the building must now be ‘emptied’ due the fire safety risks associated to the presence of combustible cladding. It was reported that the building’s owner (Hackney Council) said that ‘no tests were carried out to see if the insulation could be compliant with the cross-laminated timber frame and type of brickwork used at the block’.

Example taken from peer-reviewed study – Law, A & Hadden, R 2020, ‘We need to talk about timber: fire safety design in tall buildings’, The Structural Engineer, no. 3.

R&D in this area has therefore been focused on answering questions of:

  • Can ‘at risk’ cladding be treated to resolve the fire risks identified in this new science?
  • Can new solutions be retrofitted?
  • How can solutions be developed and applied to existing buildings in the most cost efficient and timely manner? Would this be viable or would major facades for these buildings need to be entirely rebuilt?

…and much more.

The BEIS Guidelines state: “R&D for tax purposes takes place when a project seeks to achieve an advance in science or technology”, but with the caveat of  the work being underpinned by the “resolution of scientific or technological uncertainty”.

But what does this mean, in practical terms?

Qualifying R&D activities will generally result in some type of intellectual property, methodology or technique, from either a scientific or technological perspective. Using this outcome, it would then be possible to potentially deploy this outcome to another project or client. This deployment could be verbatim or require slight adaptation (non-R&D), or even require significant adaptation work and subsequent further R&D (potentially a new R&D project).

In practical terms, where claims in architecture have legitimately qualified, there has generally been work involving fields of engineering and materials science.  However, we have also seen outliers in software development in architecture – the development of new CAD tools or modelling software, the development of novel and advanced BIM software, construction tracking software capabilities, and more.

Even if a project considered to contain R&D qualifying activity – it can be the case that a project does not qualify in its entirety. For example:

  • It may be the case that certain aesthetic or pure design phases of the project could be considered to be ‘pre-R&D’ and need to be excluded from the claim.
  • It could be the case that the R&D within a project was only focused on the development of a heating system, or a type of material integration – and the wider project is mostly routine and therefore non-qualifying.
  • After the R&D has established a viable solution, it may be a case that the most noteworthy technological and scientific uncertainties have now been resolved. Any further work after this point would then be non-qualifying to the R&D claim in this case. Further challenges may still be seen across different client implementation work, leveraging the result of the R&D, but this work may be ‘readily deducible’ and therefore non-qualifying.

Some real examples and common themes for R&D across Architecture has included:

  • Sustainability and environmental technical studies.
  • Themes of integration and junction innovation – it may be that the project sought to achieve the latest specification PassivHaus design entirely integrated against a Grade 2 listed house, which in turn generated a cascade of technical problems and work that challenged existing building regulations, building practices and known models.
  • Fire control solutions.
  • Heat/cooling efficiency systems (as well as heat recycling).
  • Dealing with environmental or physical constraints, forcing the development of novel solutions – this could be due to land contamination, high water levels or flood plain issues, the need for miniaturisation, and more.
  • We have seen R&D claims made for commercial-grade Olympic swimming pools, whereby the combination of an entirely new swimming pool system, integrated with the overall building design, sought to establish far greater build speeds, lower build costs and cheaper running costs – and a solution that could then be deployable across other leisure centre build projects.
  • Seismic activity – the need to develop new structures to survive the average earthquake, as well as, the Armageddon earthquake.

A key ‘take home’ point is to objectively understand and test precisely why your work can be qualified against the R&D tax definition, which is where LinkStep can help!