Mick Merrick Partner at Integrated Growth Solutions - iGS. Specialists in R&D Tax Relief has generously agreed to write the following article on our Blog. Driving Vision are always looking for creative ways to save money for our clients. The average claim on R&D tax credit is around £ 50,000!
Before it is built, every building will have evolved through an iterative process in order to achieve a balance between function and experience.
It is no wonder then that architecture thrives on innovation. In recent years, as a field, it has been revolutionised by numerous developments in technology, with new opportunities unlocked. Designs can now be rendered and prototyped more realistically and rapidly than ever before. These designs can also be subjected to an ever-expanding range of tests using a variety of newly developed and bespoke software products. New materials can be created, whilst existing materials can be manipulated in new ways. Advances in fields such as 3D printing mean that once impossible shapes can now be created, and new construction methods utilised.
The UK is home to many world-leading architectural practices and is known across the world for its innovative architecture. Much of this innovation revolves around designs that tackle the big shared problems of our age head-on, like energy-efficiency, air quality and sustainability. Innovation also lies in using technology to directly challenge what is achievable. With the boundaries between architecture and engineering becoming increasingly blurred along with further advances in robotics, 3D Printing, design software and computer modelling, it really is a brave new world.
Many architectural projects today will involve significant risk-taking, the development and use of bespoke software, adapting the latest technologies to help solve a range of problems, either on-site or during the design stages. Many of these areas may qualify for tax relief under the R&D Tax Relief Scheme
Where is the R&D in Architecture?
Research and development often occur in an architectural project when a design seeks to resolve “a scientific or technological uncertainty.” Any costs incurred in attempting to resolve the uncertainties faced can qualify as research and development. Creative work is undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society and the use of this stock of knowledge to devise new applications could potentially be considered as R&D for tax relief purposes.
When embarking on a project an architect may encounter a problem that means a conventional approach is not possible. It is then necessary to find a solution that works. A new way of doing things in order to overcome whatever unique set of challenges standing in the way. This requires ‘out of the box’ thinking, research into design, and investigating how clever design and use of technology can be utilised to resolve the scientific or technological challenges that the project presents. In other words, research and development.
Some of the common areas of architectural R&D involve using and adapting technology in a range of ways, like to improve the performance of products/materials and processes. Advances in testing, prototype design and design software to resolve challenges and uncertainties in new materials and technologies can also qualify.
As well as problem-solving, R&D can also occur when systems or processes are appreciably improved. If a more cost-effective or less resource-intensive method of doing an age-old task has been created, then the costs incurred in developing this process could be considered. The demands on architectural practices to create architecturally stunning creations in increasingly challenging locations and the unique buildings that are often the result demonstrate a huge range of architectural R&D and the associated costs incurred could potentially qualify for R&D
Where doesn’t R&D Occur?
In a routine project where conventional design techniques have been utilised to create the end result, it would be unlikely that R&D costs had been incurred, qualifying R&D tends to occur where complex design solutions have been created in response to sometimes unique, but often common challenges faced by architectural firms all around the world.
Architectural Design & R&D
The design stages of an architectural project are often complex and technologically advanced and as such are where the majority of the research and development occurs. Although hand-drawings and sketches are still used, it is computation and parametric tools that make up the bulk of the design phase. The development of new design and computer-aided design tools to resolve challenges or aid modelling capabilities would likely incur qualifying expenditure. Although using computers as part of the design process is nothing new, in recent times computational design tools have developed significantly. Design software is now often interlinked with fabrication, simulation and modelling tools all unlocking huge potential for architects.
Design tools and software give architects the ability to quickly and accurately visualise their designs as well as test and manipulate them. The process is much easier than ever before thanks to technological advances. Architects can now experience their designs with higher and higher levels of realism, being able to identify flaws that they most likely wouldn’t spot on plans. They can also quickly change the design as well as see how different materials and lighting options will look. There are now a variety of techniques and programmes available to render buildings with ever-increasing realism.
Larger architectural practices are developing their own architectural visualisation tools in-house so they can more accurately communicate how inhabitants might interact and the mood of a space. Hi-res 3D flythroughs have been commonly used by architects for many years to market properties, the development of proprietary tools, plugins or workflows to aid the creation of this polished 3D content could also be considered.
Further advances in virtual reality could see this visualisation process become more immersive, allowing architects and their clients to walk around and get a unique perspective on the designed space. Virtual reality has the potential to revolutionise how architects work. By virtually experiencing their designs, architects can identify potential issues and resolve them in the design stages. There is also a level of interactivity which allows you to try various materials and experiment with different solutions to issues.
Driving Vision has developed its own virtual reality software and use Vive headsets to walk through non-existing buildings before construction has begun. The development of VR technologies is likely to be a hotbed for R&D for many years to come as companies look to improve the field of view and resolution as well as resolve issues with the devices themselves, architecture is set to be both one of the most significant driving forces behind this development as well one of the biggest beneficiaries.
Another big area of R&D is in the development of various tools and methodologies that aim to streamline the transition from digital design to fabrication. Architects can now output their digital designs as models by using 3D printing, stereolithography laser-cutting and selective laser sintering (SLS). This allows them to experiment with accurate models of their designs and be much more aware of potential issues at the prototype stage. Custom tools can also test concepts, examine energy use and even get a realistic idea of how their design will perform in a range of scenarios such as natural disasters.
Why aren’t more architect practices claiming for R&D?
Architectural practices aren’t claiming as much R&D tax relief as they could. There are many reasons for this but chief amongst them is that many architects are unaware that what they do constitutes R&D. As a consequence, firms are often missing out on tens of thousands of pounds worth of tax credits.
Traditionally many architectural practices have been structured as LLPs, which has precluded them from being able to secure R&D tax relief on activities which would have otherwise qualified, as the firms did not incur a corporation tax liability. A combination of changes applied to rates of taxation means that structuring an architectural practice as an LLP has for some become potentially less advantageous, meaning many architects that couldn’t previously claim R&D tax credits as LLPs are now able to qualify having changed their structures to become Limited Companies.
The innovative solutions that architects develop are all too often seen as simply getting the job done and not something that qualifies for Research and Development tax relief. There is also the mistaken notion that if the solution isn’t ultimately successful, that the time spent on it does not qualify – this is not the case. Activities seeking to achieve an advance in science or technology can still be eligible for R&D tax credits, regardless of their ultimate success. Others believe that you need to have a dedicated research and development team in order to apply. This is definitely not the case. The test applied by HMRC is whether a competent professional in the field would have been able to resolve the challenges faced and reach the same conclusions without their competencies being overly stretched.
As some of the most innovative in the world, UK architects need to take full advantage of R&D Tax Credits in order to maintain their global position and continue to advance the technological baseline. The R&D tax credit scheme will not apply to every architectural practice, but chances are if you invest in innovation then you will be able to claim.
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