eCommerce R&D
What’s shopping got to do with science and technology research? Actually, quite a bit.
The technology online retailers use is developing all the time – and if your work involves improving that technology in a way that can benefit the sector as a whole, you might be able to benefit from a government scheme offering financial support.
The scheme
The research and development tax credit scheme is designed to encourage innovation in science and technology. It rewards companies who are trying to make advances in their field by giving them some of their costs back. This can often amount to tens or hundreds of thousands of pounds.
To be eligible, you need to be trying to discover something new – developing a new product, process or service, or substantially improve one that exists. The work must have a wider benefit beyond just your business, and involve trying something that you weren’t sure was possible. So, making minor adaptations to software to tailor it to your company probably wouldn’t count, but developing that software in a way that advances what online retailers in general can do may well qualify.
How could this apply to online retail?
You’d be surprised how often the development of technology for online retail meets the criteria above. In the tax year 2016/17, companies in the wholesale, retail and repairs sector made nearly 2,000 claims for research and development tax credits, and received more than £400 million in total. The research and development doesn’t have to be your main line of business – as an online retailer, it almost certainly won’t be – it’s enough that you’re doing it.
Here are some examples of areas which could qualify:
Personalisation: building a recommendation engine; using artificial intelligence to recommend products
Data: developing systems for analysing and handling data, in areas from fraud prevention to medical records
Payment technology: developing payment systems that are smoother, more secure or can take payments from around the world; furthering the application of digital currencies
Cybersecurity: combating fraud, hacking, malware or data theft, for example through data encryption, customer authentication, biometrics or voice recognition
Web development: developing anything from search functionality to stock control systems
Virtual reality: developing virtual stores
What costs can I claim?
The two main areas that are likely to be relevant to online retailers are staff costs for people working in technological research and development – salaries, national insurance, pension contributions and some expenses – and any materials used in your research. You may also be able to claim some of the cost of paying subcontractors. This r&d tax credits calculator can give you an idea of how much you could be eligible for.
Because it’s the attempt that’s important, it doesn’t matter if what you try to do actually ends up working or makes any profit, and there is no minimum spending requirement. You can claim r and d tax credits retrospectively too, up to two years after the end of the accounting period in question.
