It easier now for companies to put any artificial intelligence (AI) algorithm and machine learning methods into production as we are entering another era of computing democratisation. By nature, the AI sector is innovative and heavily relies on R&D activities. These activities may qualify for R&D tax incentives. A typical claim may include activities conducted for software development, creating efficiency in a process, and automating legacy systems. For expenditures, you can claim for costs that were incurred to conduct eligible AI project activities. Wages, contractor fees, rent, electricity, internet, hosting costs, and equipment are examples of the expenditure where you can file a claim.
Although the term Artificial Intelligence sounds like a buzzword, it is hardly a new concept. It has been around since the ’50s and it uses some methods from statistics that were discovered and refined since the 18th century. For instance, Bayesian methods have been used for probabilistic inference in machine learning since the 1960s, whereas Support Vector Machine (SVM) and Recurrent Neural Network became popular in the 1990s. Meanwhile, unsupervised machine learning methods have become widespread in the 2000s. Finally, in the 2010s, deep learning became feasible due to advances in hardware. Hence, any activity done to solve problems in building products or functionality that have been developed using these algorithms may not be considered valid for a claim as these issues may be solved by one of the many experts in this field.
Activities of AI Projects
Activities of your AI project may be eligible for R&D Tax incentive if it resulted in novel contributions on the theoretical side, such as new machine learning algorithm or neural network architecture, or on the application side, such as new or significantly improved products or functionalities that use modified versions of machine learning algorithms and neural network architectures. Although novelty in theory and in application is a strong proposition for claiming R&D tax incentives, it is still not sufficient to fully rely on them. Since the claim will be based on eligible activities rather than the overall project, therefore, how the activity was conducted and whether its outcome could not be determined in advance are among the most important factors to be consider. With this said, it is also possible that even though the project is innovative, he related activities might fail to meet the eligibility criteria. It is also important to note that AI projects and their activities conducted primarily to improve your company’s internal administration are excluded from being a valid activity for R&D tax incentives.
Self-assessing the eligibility of AI activities may seem daunting, and that is where we come in to assist you. We have years of experience delivering R&D Tax incentive to various software and tech companies – some of which use Artificial Incentive and machine learning in their since whatever products the client will be producing will be part of one or more projects. We are confident that we can help you determine your eligible projects and activities, as well as maximise the amount of eligible expenditure that you can reimbursed.