In order to unlock the features of Novel you have to add an organisation. This will allow the system to automatically populate the relevant accounting periods so you can get started creating your R&D tax relief claims. Follow the steps below to add an organisation in Novel.
Under the Create Organisation, in the field where it says ‘Search Companies House’, write out either the name the company is registered as on Companies House or the Company Number. Give it 5-10 seconds to load. A field should appear under with the name of the company, click on it.
2. Next click the field with your company name, which will expand and show the Current Accounting Period and Previous Accounting Period. To proceed further, click on the Confirm Organisation Details button.
3. Once you Confirm Organisation Details you will gain access to the platform and your 3 month trial period will commence.
“I’m not sure I can take that off my to-do list just yet, I can see that Bill still has to add some numbers.” Seems like a common sentence within the office environment but when it comes to building a software that actually communicates this type of information, it’s not so straightforward.
Products that require collaborative work need to provide their users with means to plan, collaborate and track to ensure that everyone is aware of what has been done and what is left. Now when you’re dealing with something as complicated as claiming R&D tax relief, building a software that is able to support these sorts of processes will act not only as a guiding force but will also help reinforce the quality of the claim.
Claiming R&D tax relief can be a tricky process, especially if you haven’t done it before. In a way, you have to submit to HMRC two types of reports, one is the technical narrative and the other the financial narrative. In the technical narrative, you outline all the different types of projects, activities and experts that were involved. In the financial narrative, you attach numbers to your technical narrative. Often the people who are involved in the technical side of things, are not involved in the financial aspects of the projects.
For example, if you are a team of chemists working on a new flavour for a beverage company, you are concerned about figuring out a way to make sure that the formulation of the new drink is stable by testing its chemistry, stability and performance. You would rarely find that these people are also the ones handling wages, paying for the inventory and handing subcontractors invoices, these sorts of things are handled by the accountants or HR departments.
This is why when it comes to writing an R&D tax relief report, the information required is often held by different people. A claim won’t be successful if the information held by the different types of people isn’t combined correctly, which is why it was important for us that when we built our R&D tax relief software the aspect of collaboration is at its forefront.
Value built on collaboration
We knew that for our clients to claim successfully, Novel needs to provide its users with means to plan the team’s work and track user changes to ensure everyone contributes fairly and is aware of the latest changes. So how does Novel help users within an organisation stay up to date with the organisation’s most recent updates?
As part of a large organisation tracking system with complete visibility over history changes, we have recently implemented a push notifications feature, which allows users who belong to the same organisation to see its most recent changes. Users who are within an organisation level can now open a notifications menu from the top navigation and see what part of the organisation was updated and who did the change. Navigating outside of an organisation level and opening the notifications menu would instead show the most recent updates regarding the user’s account.
What does it mean for the users?
Let’s be honest, things get forgot and things get missed. The value of having a notification system to track what different users within the system do helps us always be aware of the progress of our R&D tax relief claim as well as what changes have happened or haven’t. This function is also meant to help users plan their next steps and not miss key deadlines.
For example, the chemists go into Novel and submit that the project for the new flavour they have been working for has been complete. In turn, the users with the knowledge of the financial side of things can use this as an indicator to put in the relevant costs data.
For the techies out there, this is how we did it
Regardless of how complex or simple an app feature is, it must always be implemented with best possible user experience in mind – ease of use and to take little to none of the user’s time. Novel notifications menu is well crafted to allows users to see all the information they need within a few seconds of opening the menu. We achieved this by using coloured text to emphasise on the message key words and the profile picture of the user who made the change.
We decided not to show the actual change in the notification message, as it would be unreasonable to put a large chunk of text in a small notification menu. Instead, users can click on the notification and they will be taken to the page where the change occurred and see what was updated. Showing the actual change would certainly help our users better manage their organisation, but this will be left for the part of the organisation tracking system mention above.
For those interested in the technologies used, the back end keeps track of and stores an organisation or user account recent update logs in AWS CloudWatch. These logs are then fetched, parsed and altered to be relevant and human readable through AWS Lambda and passed to the front end. The front end runs a few functions to store in Redux, cache in Local Storage and format using declarative approach the logs. Also, to maintain a two-way real time communication we have implemented web sockets which listen for any upcoming notifications.
Do your next R&D tax relief claim with Novel
Generate HMRC-compliant R&D tax relief claims without the complexity quickly and efficiently in-house as well as take advantage of its suite of features: education content, financial aggregators that make complex calculations for you, and R&D tracking feature.
Preparing R&D tax relief claims hasn’t been easier.
The appearance of sustainability and greenness is important to businesses. From petrochemicals to probiotics, modern publicity campaigns seem incomplete without a diverse gallery of smiling people. All living in the moment, surrounded by nature, and blessed with eternal sunshine.
It’s no coincidence either. We’re suckers for emotional arguments, and that’s part of what makes us human. Whichever way you slice it, we are far less rational than we like to think – and the green‑washers know it.
But being green is inherently greater than just appearing green, and research and development (R&D) tax reliefs are designed to reward those companies who are helping to improve the way in which we co-exist with the natural world. Activities that contribute to improving the efficiency and sustainability of existing processes can qualify for tax relief under the research and development scheme. We’ve put some examples at the bottom of this blogpost, but to understand why and to properly deconstruct the blog’s title for its aphoristic value, we want to introduce you to an interesting economic concept: the externality.
Cool, so what is an externality?
In a nutshell, an externality is a cost or benefit that is imposed on a third party who did not agree to incur that cost or benefit. ‘Costs’ to the third party are called negative externalities, and benefits are termed positive externalities.
Imagine you’re a crop farmer, and your neighbour invests in an apiary. You don’t pay for the bees, and you don’t pay for their upkeep, but you benefit because the neighbour’s bees pollinate your crops and increase your crop yields. Ka-ching! That’s a positive externality.
Alternatively, imagine you’re embarking on a much-needed mini-break. You’ve bagged yourself a bargain on Skyscanner and you’re flying Malaga-return for £50, good for you! Also, the airline is covering its fixed costs on a seat that would otherwise have gone empty, so that’s great for them too.
Both parties directly involved in the transaction are happy. You do feel a little guilty that the carbon-footprint of your jet-setting lifestyle contributes to the developing climate crisis – but why should you pass up this opportunity that you’ve been gifted? Anyway, the scientists of tomorrow will come up with a solution when we really need it, and you’ll probably be long gone by then anyway. Just like that, you’ve imposed a significant negative externality on people who don’t even exist yet.
This is an example of what economists call a market failure, in which individuals pursue the outcome that is best for themselves individually, but which leads to suboptimal, bad, or even disastrous outcomes from a societal perspective. Adam Smith’s metaphor of the invisible hand explains how individuals’ selfish pursuit of their own interest can lead to societal benefit. This is the great wonder of capitalism. Smith knew however, that the invisible hand’s anthropogenic nature made it characteristic of some distinctly human foibles. That’s a fancy way of saying that human imperfections make the invisible hand clumsy.
OK, that’s all well and good. But what does any of this have to do with sustainability?
Well, when it comes to incentivising more positive practices and fewer negative ones, forcing the costs or benefits of the externality to be reflected in the initial transactions is one solution. This internalisation means that the cost or benefit of the externality is considered in the original transaction.
Maybe there’d be fewer flights if flying was taxed more heavily, and maybe the tax revenue could be used to incentivise research on greener flight technology? Maybe your neighbours in the first example would have installed the apiary sooner if they knew you’d be willing to subsidise some of the cost, if there was a fund to support such communally beneficial activities, or if keeping bees attracted tax-benefits. See where we’re going with this?
There is a problem with all of these interventions though, which is that every newfangled measure has the potential to introduce more administrative complexity. Before you know it, you’re operating in an acronym-laden tax and policy environment that’s about as viscous, opaque, and sensical as a bowlful of alphabetti spaghetti. The pace of innovation is inevitably slowed if firms competing to survive are forced to invest significant amounts of time in a bureaucratically complex arms race, rather than innovating, for a strategic advantage. Where you draw the line on what constitutes the right level of market-modulation is subjective by definition (it’s where you draw the line), but it’s hard to argue that incentivising societally beneficial practices isn’t of virtue.
Enter: Research and Development Tax Reliefs
Companies undertaking research and development generate positive externalities which they are not themselves going to capture the value of. These externalities are general advances in understanding or ability, which have a general tendency to be combined and built on by others in unforeseen ways. From a scientific and technological perspective, this principle has been understood for centuries. Isaac Newton claimed to have seen further if only because he was “standing on the shoulders of giants”, and the iPhone owes its existence to billions of dollars’ worth of state-funded military research. It’s a well-established societal perk of R&D activity, but one that doesn’t inform the investment decision from a corporate finance perspective; Apple probably wouldn’t have invested in pressing the smartphone revolution if the smartphone’s technological foundations weren’t already in existence. The research and development schemes are designed to link the wider societal benefits of undertaking R&D to the initial financial investment decision, so optimising the level of investment in scientific and technological advancement.
We’ve touched on this already, but there is huge value in preserving the ecological health of our local and global communities. There are also huge costs to getting it wrong. That’s why the costs incurred in advancing science or technology, specifically where these relate to the sustainable refinement or alteration of existing processes to make them more efficient and ecologically friendly, are included in the scheme. If you’re innovating to find new ways of reducing the negative externalities imposed on the planet, HMRC will internalise some of that benefit to you in the form of tax reliefs or credits. Examples of qualifying activities include:
Developing alternative packaging that is more ecologically sustainable. This might include research to develop new bioplastics or the technical development of new bioplastic products.
Finding new ways to reduce the amount of water or energy used in a process.
Finding ways to reduce pollution and environmental contamination with new capture methods for hazardous chemicals or processes that use fewer or less ecologically harmful chemicals.
Developing new recycling processes and technologies, such as AI-enabled recycling sorters.
It’s clear that R&D tax reliefs are important, and there is great societal value to their existence. Whilst they are an often-misunderstood part of the tax system, we’ve witnessed significant advances in the industry in recent years which make it easier for companies to understand how they can benefit from such schemes. But we wanted to do more, and that’s why we created Novel – a digital platform designed to help people claim R&D relief as simply as possible. This means you can start claiming relief on your qualifying costs right away and plough more back into the work that really matters.
You won’t need an R&D consultant to use Novel, although our team is always on hand for support or advice should you need it.