Claiming R&D for Blockchain Project Activities

It is believed that Blockchain is the most disruptive and promising among many emerging technologies. Theoretically, most software applications today can be used with blockchain. Blockchain’s most defining feature is that it can provide confirmation as to when and who made a transaction by referring to its distributed and immutable database; however, the technologies behind that make the confirmation possible is not new to blockchain. Peer-to-peer networks, cryptography, and game theory have been around for a long time but blockchain is the technology that first combines these three. Nonetheless, blockchain still requires innovation to continuously improve its technology. There is a need for R&D in the areas of blockchain that includes but is not limited to security, accessibility, and usability. This provides an opportunity for companies to receive R&D tax incentives. Recently, there are many companies that are building their custom blockchain to improve the performance of their internal processes, while this may imply innovation, R&D activities conducted for one’s own business processes are not eligible for the R&D tax incentive.

As blockchain is also considered a foundational technology, it finds itself being utilised beyond banking. For instance, when blockchain is applied in energy markets, it could help create a decentralized model where sources and consumers can automatically trade energy. The manufacturing industry also has an optimistic outlook towards blockchain. There are many areas in the manufacturing industry to which blockchain can be used but the main category where it is deemed to contribute the most is in the supply chain and logistics.

Applications of Blockchain

The applications of blockchain are broad and there are infinite ways where R&D can be executed to fill in a blockchain-related knowledge gap. However, similar to claiming R&D tax incentives for other sectors, the eligibility is based on R&D activities instead of the R&D project in its entirety. If a project is innovative and/or novel but the activities involve to realise it is not, then R&D tax incentive cannot be claimed.

Below are some examples of a valid blockchain-related R&D activities:

1. Creating a new algorithm to convert any file of size into a hash value (which would allow the file to be stored in the blockchain)

2. Building more reliable P2P networks for blockchain.

3. Inventing a new approach to easily increase block sizes to allow large datasets to be stored on-chain.’

It is to be expected that a company made an effort to conduct research or consult an expert in the field before claiming that blockchain-related project activity is considered an R&D activity. In many cases, a technical uncertainty that a project activity aims to shed light on can be resolved by applying expertise. Moreover, it is extremely important that companies keep a close record of all experiments conducted for each activity; otherwise, it would be difficult to prove their eligibility.

We at Innercode can help you assess whether your blockchain-related project activities are eligible as R&D activities. By having the right advice and insights straightaway, you can be sure of maximising your R&D tax claim. We have years of experience delivering R&D Tax incentives to many software and tech companies – many of which are building enterprise and consumer blockchain projects. Through our streamlined process of analysing claims, we are confident that we can help you determine your eligible projects and activities in just a few hours of your time.

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Post Author: AdminInnerCode

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