Research and Development Tax Relief for the Pharmaceutical Industry

Which Pharmaceutical activities are eligible for Research & Development tax claim relief?

One of the largest industries where development and research takes place in the UK and every part of the world is the pharmaceutical industry. The industry invests large amounts of money to carry out research and development work every year.

The pharmaceutical industry also receives a lot of grants and funding. Quite a large number of UK pharmaceutical industries use Research & Devlopment (R&D) tax credit claims.

However close to 90% of pharmaceutical companies in the UK carrying out innovative activities are not on the receiving end of the tax claim relief maybe because they are not aware of R&D credit scheme or assume that they are not eligible for the tax relief.

Others do not take the trouble to understand what the tax relief claim entails and end up under-claiming.

What kind of pharmaceutical activities can fit the bill for R&D charge credits?

Just like very many other enterprises and manufacturing processes, the kinds of pharmaceutical exercises considered R&D are diverse because of the nature of testing methodologies required to meet administrative prerequisites.

The time it takes from the initial stages of research on any specific medication to advertise is for the most part in the order of 10 years. Furthermore, very little of the initial compounds that start the testing procedures meet the approval of regulatory body. Research and development in the pharmaceutical industry commonly happens in four phases:

1. Drug revelation

This stage distinguishes and confirms if the new chemical entities are promising.

2. Pre-clinical preliminaries

Pre-clinical preliminaries or trials main concern is with testing of the different compounds to non-humans. After this, if there is satisfaction of success, the compounds that pass the test move further to clinical preliminaries.

3. Clinical preliminaries

Clinical preliminaries pass through three stages. The stages are classified as poisonous quality tests (stage 1); starter adequacy tests (stage 2) and similar viability and mediocrity tests (stage 3). Work in these initial 3 phases will probably be viewed as R&D.

This will probably incorporate work on applying to and reacting to the controller or regulator, and work on doing further testing as asked for by the controller or regulator. The vast majority of the work associated with making an application to the controller would include work that specifically adds to the determination of mechanical vulnerability and would most likely qualify as R&D.

4. Post-dispatch

The post-dispatch stage happens after the authorisation of an item. Therefore, this stage includes post-advertising corroborative investigations, exceptional premium examinations, longer-term viability, tolerance levels and so forth.

Work in this stage is not eligible for R&D unless the work includes a logical or innovatively propelled vulnerability.

How to choose what qualifies as R&D in the Pharmaceutical business

In many instances, the exploration exercises of revelation, pre-clinical improvement and Phase 1-3 preliminaries will typically determine the logic of the exercises and the innovative vulnerability. However, stage 4 (post-dispatch preliminaries) may not do the same.

Our experience has demonstrated this is for the most part a suitable beginning stage for examination of cases from pharmaceutical organizations.

On the off chance that there are unordinary conditions where R&D is done in Phase 4 preliminaries and not done in a few components of stage 1-3 preliminaries, then further analysis is undertaken. What is vital with each claim is that the organization asserting can show by reference, what it has really done with expenditure has the support of R&D.

How much does the pharmaceutical industry benefit from the R&D tax credit scheme?

Pharmaceutical innovative schemes can benefit cash claims of up 33% of R&D identified expenditure. This means that if you spend roughly 100 pounds on R&D, you could get a cash claim of 33 pounds. This is a worthwhile incentive, which in many cases can provide your organisation with ready cash especially in the early stages of development when there is little money to go around in setting up.

The most important factor is to make the most use of the expenditure and activities identified for R&D.

If you have a pharmaceutical firm and you do not know where to start, do not worry because there are many R&D advisers to guide you through everything. Do not let the benefits pass you by because you were not sure.