Innovation Q&A with Shenal Wijetunge

Businesses can spend months solving technical problems without recognising the potential innovation involved. Shenal Wijetunge, Partner at DSW Tax Advisory, explains what to look for, why timing matters and how better conversations can uncover overlooked opportunities.

Why do businesses overlook their own innovation?

Often, they see it as simply doing their job. An engineer solves a production problem. A developer works around a technical limitation. A food manufacturer adapts a recipe when ingredients change.

Ask the business whether it carries out R&D, and the answer might be no. Ask what its team has struggled to develop or make work, and you can have a very different conversation.

Does a difficult project automatically qualify for R&D tax relief?

No. A project being complicated, expensive or new to the business is not enough.

It must seek an advance in the wider field of science or technology and involve resolving scientific or technological uncertainty. In practical terms, we need to understand why a suitably experienced professional could not readily work out whether something was possible, or how to achieve it.

Identifying a technical challenge starts the conversation. Next, assess whether it meets the criteria. Read HMRC’s eligibility guidance.

Can innovation be involved in keeping a product the same?

Absolutely. Food manufacturing is a good example. Imagine a business that’s made the same product for years. Its raw material supplier changes, and the new ingredients behave differently. Customers still expect the same taste, texture and consistency.

Behind the scenes, the team may carry out extensive trials to understand those differences and develop a solution. The finished product looks familiar, but the work behind it deserves a closer look. Whether it qualifies depends on the scientific or technological advance and uncertainty involved.

What should accountants and business advisers ask their clients?

I would start with five questions:

What have you developed or materially improved?
What was the technical challenge?
What did you try that did not work?
Who worked on solving the problem?
When is the company’s year-end?

The accounts can also offer clues: development expenditure, testing costs, prototypes or the recruitment of engineers and developers. None proves that qualifying R&D has taken place, but each can give you a reason to ask more.

Why is it important to have these conversations early?

Leaving the conversation until the accounts are being prepared can mean an opportunity is identified too late.

Some companies must notify HMRC that they intend to claim R&D relief. Where required, the notification deadline is six months after the end of the period of account. Whether notification is needed depends on the company’s claim history and the relevant rules.

Checking this early helps protect the opportunity. It also gives the business time to capture the technical evidence and costs while the work is happening.Check HMRC’s claim notification guidance.

How does your engineering background influence your approach?

My background is in chemical and process engineering, including work as a food scientist and engineer. That helps me get into the details with the people doing the development.

I want to understand what they were trying to achieve, what prevented them from getting there and how they approached the problem. Speaking directly to technical teams can reveal work that is not immediately visible in a set of accounts or a conversation with management.

How do you work with a business’s existing accountant?

Closely. The accountant understands the business, its finances and its wider plans. I bring specialist technical and tax knowledge to help assess the development activity.

Different advisers see different parts of the same business. Bringing those perspectives together helps us identify opportunities earlier and give the client a more complete service. Accountants do not need to become R&D specialists to recognise when a specialist conversation would be useful.

What should a business do if it thinks it may be missing an opportunity?

Start with a conversation about the work itself. What have you been developing? Where have you encountered technical problems? Who in the team can explain what happened?

We can then assess the potential activity, check relevant deadlines and identify what information is needed. My aim is to help businesses understand the value of their innovation and, where relief is available, use it to support further investment and growth.

Could there be innovation hidden in your business – or your clients’ businesses?

Contact Shenal to explore the opportunity.