Is a 50% failure rate on innovation good or bad?

Iain Gray of MSC R&D - techUK’s R&D Funding & Commercialisation Partner

According to Cisco Europe’s Director of Innovation, speaking at techUK’s recent Supercharging the Digital Economy, 50% is way too low to be good!

50% suggests a lack of risk taking and a lack of vision and drive to try and find that next big idea that will disrupt the market and transform your company’s fortunes.

Cisco’s view is that the next big idea will not come from Silicon Valley – instead it will come from some small, agile and highly innovative team of people somewhere in the world – and that Cisco’s role is to help enable these people to innovate.

Having a success rate below 50% also means that a lot of projects have gone by the wayside – but that is not to say that these unsuccessful projects don’t qualify for R&D Tax Relief, a mistake a number of companies make when calculating their R&D Tax Credit claims.

Work that fails because you could not develop a workable technological solution or because the technological answer could not be produced in a cost-effective way may still count as R&D.

R&D is work done to achieve a scientific or technological advance through the resolution of scientific or technological uncertainty.

Sometimes that can be obvious, but the definition for relief purposes can be quite broad in its application. It can include:

 

  •  achieving an increase in overall scientific or technological knowledge or capability
  •  significantly improving products, processes, materials or services through scientific or technological development.
  •  using science or technology to duplicate the effect of an existing product or process in a new or appreciably improved way.

 

The identification of R&D for claims is based on the definition set out in the BIS R&D Guidelines issued by the Department for Business, Energy & Industrial Strategy. This complicated rule base sets out the basic concepts, gives examples and defines R&D for tax purposes.

But the words do not necessarily fit neatly to an actual R&D project in a business context – so they must be interpreted in the light of the facts on the ground.

This is a real skill and where an advisor, if they have the appropriate technical expertise, can be very helpful, correctly identifying the qualifying R&D projects, and their limits.

MSC R&D have been providing our clients with the highest quality R&D Tax Relief service on a 100% contingency fee basis since the scheme’s inception. We match our technical analysts to the technology of our clients to ensure no eligible R&D is missed.

http://mscrnd.com/rd-tax-credits/

https://www.youtube.com/watch?v=Pkhj1zKN_JI

 

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