R&D Tax Credits for Upstream

R&D Tax Credits for Upstream
The software underpinning RDRelief was sold to one of the big-4 professional service firms in 2018. Consequently, the brand is no longer in operation.
  • R&D Tax Advisors are invited to find out more about the Inspired.tax claim preparation software.
  • Otherwise, please feel free to continue to browse this website for useful information regarding claiming R&D Tax Credits in the UK. However, beware that none of the information has been updated since 2018.

Eligibility Criteria

Main article: Eligibility Criteria
The UK Department for Business, Energy & Industrial Strategy (BEIS) has explicitly defined R&D Tax Credits. This briefing will help you determine the types of Upstream projects that are eligible and what costs could qualify.
The eligibility criteria apply to all fields of Science and Technology rather than just Upstream (hence they are quite generic). They state:

Technological Advance in Upstream

The Scientific or Technological Advance must be relative to the current industry baseline within Upstream. Hence it can't be that you are applying Technology for which there is already a publicly available reference. Likewise, it can't be a commercial, business or functional Advance - it strictly must be a Scientific or Technological Advance.
R&D can often be found in exploration, reservoir engineering and subsurface development, as modelling and geophysical workflows often have to be developed. These are typically eligible R&D for Tax Purposes.
There are many potential types of R&D in this field, which can include the "appreciable improvement" of simulations to match production output better.
Alternatively, the integration of technologies, in a non-standard way, to develop a new drilling process, which may either be more efficient, or more cost-effective than other known drilling methods.
Furthermore, other types of uncertain projects can be eligible, such as developing new or improved processes to deal with difficult locations or chemicals.
The key point around the Technological Advance is that you must be going forwards from the industry baselines of knowledge and capability, which means that you can't just be coping, or reusing information in the public domain.
In subsurface projects, this may include seismic interpretation, workflow and model development.
In drilling, this may include detailed Technical studies.
As well as the costs directly relating to the overcoming of Technological Uncertainty, project management, can be included in the claim.
Costs of materials consumed in R&D, such as for prototypes, can also be included within an R&D tax credits claim.

Technological Uncertainty in Upstream

The Uncertainty refers to the scenario where an upstream competent professional is uncertain whether the Technology is feasible, or what the best way to achieve it in practice would be.

Includable Activities

Unlike most tradition project timelines, an R&D Tax Credits project starts when work to resolve Uncertainty commences and ends when the Uncertainty is resolved or work otherwise ceases.

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