R&D activities involving an appreciable element of novelty

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Introduction

Systematic, investigative and experimental (SIE) activities need to either:

• involve an appreciable element of novelty, or
• pursue the advancement of science or technology by resolving scientific or technological uncertainty.

You need to satisfy one or other of these tests, but not both.

Novelty

Novelty means the development of a technology or the new use of an existing technology. This can be paraphrased as seeking to extend the technological frontier or seeking to use technical approaches that are new to the relevant area.

To determine whether or not something is novel, the relevant question is what is already known about that technology on a reasonably accessible world-wide basis. To be reasonably accessible the knowledge must be publicly available.

What is technology?

Technology is defined as the practical application of scientific principles and knowledge.

What is appreciable?

The intended novel development does not need to be major or successful, but the element of novelty must be meaningful or significant in the context of the claimed activities.

Whether a given situation meets this test would depend on whether it is likely to be seen as a meaningful or significant development or new use by a competent professional in that field.

Is a new material, product or process or the like required?

To have a claim for novelty you do not necessarily have to produce, or seek to produce, a new output (material, product, device, process or service). You may be seeking to improve an output by developing or newly using a technology.

On the other hand it is not enough that your proposed output is in some sense 'new'. The test for novelty is not on the output but on whether or not a development or new use of the technology contributes to the output.

To be eligible under the novelty test the R&D must involve a development or use of the technology that is not already known on a reasonably accessible world-wide basis. This means that it must contain new thinking, an original idea or inventive steps - things that are not obvious to professionals in that field at the time.

While you do not have to take out a patent, the activities, if successful, are likely to result in a patentable or other 'protectable' intellectual property.

A business could exactly replicate an existing output, but because they developed a new technical approach (one that was not already known on a reasonably accessible world-wide basis) they could have a claim for the tax credit on the basis of novelty.

What is a new use of existing technology?

To successfully bring a claim based on a new use of existing technology the use has to be new, compared with what is already known (on a reasonable accessible world-wide basis) about what that technology can do.

If a business develops a 'new' output that uses the known capabilities of existing technologies it will not have a case based on a new use of the technology.

Eligible R&D activities in a claim based on appreciable novelty

When a claim is based on appreciable novelty the only activities eligible for the tax credit are the SIE and support activities required to determine whether the novel development or use of the technology will meet the required technical specifications.

Can I use patents as evidence?

You do not have to patent the results of a development for it to meet the test for novelty, but a patent will be taken as strong evidence that your activities meet the test.

Find out more

• What is research that is systematic, investigative and experimental?
• R&D activities aimed at resolving scientific or technological uncertainty
• R&D activity need not be successful to be eligible
• Support activities
• Determining when eligible R&D activities start and finish

Date published: 24 Mar 2009

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