Claiming R&D for Serverless Computing

Serverless computing, Function as a Service (FaaS), or cloud computing allows companies to quickly build and deploy applications by providing large computing resources on demand. Microsoft Azure Functions, AWS Lambda, Apache OpenWhisk, and Google cloud platform are some of the most popular serverless vendors.  Essentially, serverless technology can execute a company’s functions automatically based upon events triggered by humans or another program. The company can then pay for the service as it is executed (for event-driven application) or on a short-term basis as needed (for procedural application). Moreover, serverless computing relieves users of physical infrastructure management and the complexity around scaling business functions. Aside from simplifying the operations of companies, serverless computing encourages higher hardware utilisation by multiplexing workloads from different companies. Nonetheless, there is still a lot of R&D needed to be done to improve this technology. For instance, serverless architecture has more potential points of attack. These points could be on every event-driven or procedural function, API, and protocol. Moreover, there are inherently more permissions to manage when using serverless technology.

Claiming the R&D Tax Incentive for serverless computing project activities that involve software follows the same rules as claiming software-related R&D activities of any other technologies.

The key tests are for eligible activities where there was a lack of existing technical knowledge available, that experimentation was required to develop them and there was technical uncertainty in terms of the outcome of the experiments.

Some examples of these activities could include:

1. Creating a new scheduling algorithm to overcome security challenges

2. Developing a new algorithm to quickly scale up computational capabilities of serverless technologies

3. Improving existing algorithm to efficiently implement broadcast communication pattern of serverless computing

4. Writing a linear algebra algorithm to effectively utilise server resources

As you may observe from the list above, valid R&D activities for serverless computing are highly theoretical and involves mathematics. If your company has undertaken similar development as the list above, these activities may be eligible for the R&D tax incentives. However, these activities or the project where these activities are conducted should not be for the purpose of improving your company’s internal business processes or administration.

Furthermore, companies often make the mistake of assuming eligibility based on the project as a whole instead of the possible R&D activities conducted to complete the project. It is also to be expected that a company made an effort to conduct research or consult an expert in the field before claiming that a serverless computing 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.

We at Innercode can help you assess whether your serverless computing 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 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.