Client Overview
Our client is one of the leading companies in the world in the field of software for Telecom companies. They work with over 75% of the world’s largest telecom companies to provide platforms that underpin a variety of underlying functions and capabilities. They operate in multiple countries and have a strong presence in the UK as a platform provider to the major telcos. The company has invested significantly in the development of technology covering areas such as network security, analytics, fraud detection, digital identities, and IoT.
Problem Statement
Our client enjoys a leading-edge position in the industry worldwide and has technology teams distributed across the world. The core product development is shared between different geographies. The UK team acts as an extension of the core product team, collaborating with clients in the UK to develop specific solutions as per the customer’s requirements.
The company was unsure how to approach the topic of R&D Tax Credits, given the work is a mixture of product development and developing specific solutions for clients. They were unclear about the R&D eligibility criteria and how it applies to commercial projects where their customer has awarded them contracts to develop next generation technology. They were also unsure about how to extract the relevant data from their internal systems and whether IP ownership of projects developed on behalf of customers impacted their R&D claims.
ResearchQX were engaged to provide assistance in preparing R&D claims for the company for the first time.
Our Process
ResearchQX initiated the process with a detailed discussion of the client’s global structure to establish the fact patterns around how the product development was undertaken and how client specific projects were organised – both contractually and in terms of the working model. Using these sessions, the demarcation between pure platform development projects and client specific solution developed was established.
Further detailed technical discussions with the client were undertaken to establish whether any part of their specific customer projects fell into the category of staff augmentation for their end customer. Accordingly, such projects were excluded from the assessment in line with the R&D eligibility criteria.
A detailed costing model was developed by ResearchQX, linking projects, project types (whether internal development or client specific), nature of engagement with customer (whether turnkey development or staff augmentation) and other associated parameters. Based on this model, the projects were reviewed in detail and assessed for R&D eligibility. Following this a report was developed to outline the end-to-end methodology and detailed technical descriptions of the qualifying project spend. The claim was submitted to HMRC and agreed with a turnaround time of 10 weeks end-to-end.
Key Metrics
Our client benefited from a claim for the first time in the UK. As an international group, they also have potential opportunities in other jurisdictions and are exploring the possibilities to claim.
The fast turnaround time in project execution, combined with a good understanding of the Telecom domain meant that ResearchQX was able to create an efficient and repeatable model for the client’s R&D claim to be prepared on a real-time basis in the future years. This has provided the client with much needed visibility on claim numbers early in the process as being a multinational group, there are other complications with tax returns – having early information about R&D claims enables them to calculate other dependent information in a timely manner.
