OECD and R&D Overview

OECD and R&D

• OECD is an intergovernmental economic organization, founded in 1961, with 37 member countries. Its goal is to stimulate economic progress and trade.
• Research and experimental development (R&D) involves creative work, systematically undertaken to increase human knowledge and devise new applications.

Key Criteria for R&D

• R&D activities must be novel and creative.
• Outcomes must be uncertain.
• Activities must be systematic and transferable/reproducible.

UK BEIS Definition of R&D

• R&D involves seeking advancements in science or technology.
• Directly contributing to scientific/technological advancements by resolving uncertainties is R&D.
• Certain qualifying related activities are also considered R&D.

Practical Applications of R&D

• Creating new or significantly improved products, processes, or services, often involves problem-solving where no clear solution exists.
• R&D projects can be undertaken for clients or for the company itself.
• Government definitions of R&D are broad, covering any company, size, or sector, that takes risks to resolve scientific or technological uncertainties.
• This can include creating new products/services or modifying existing ones to improve them.

Qualifying for R&D Tax Relief

• A project must aim for scientific/technological advancement, not just company knowledge.
• If the advancement exists but specific details are unknown (e.g., trade secret), the project still qualifies as R&D.
• An unsuccessful project can still qualify if it sought an unknown solution.

Appreciable Improvement

• "Appreciable Improvement" as defined by guidelines (BEIS) requires a change or an adaptation in scientific/technological aspects that is better than the original.
• It's more than a minor or routine upgrade and should be acknowledged as a genuine, substantial improvement by a competent professional in the field.

Projects that do NOT qualify for R&D Tax Credits

• Routine copying of existing products/processes/services generally doesn't qualify as R&D.
• Improving cosmetic/aesthetic qualities of existing something is not R&D itself, but improvements from technology application might qualify.

R&D Boundary

• R&D begins when a project aims to advance science/technology and ends when uncertainties are resolved.
• User testing or commercial marketing beyond uncertainty resolution is not R&D.

What is Needed for Future R&D

• Gathering examples of problem solving attempts.
• Open mindset for the fact that some challenges might be outside of the ordinary.
• Internal work and projects are considered to potentially be R&D.
• Focusing on efficiency, new methodologies and software to potentially qualify as R&D.
• Recording unsuccessful attempts that demonstrate risk and uncertainty.