This is common mistake by R&D Tax Relief claimants, as companies sometimes have been found to have made an incorrect assumption that the advance can be relative to the science or technology that existed previously in the company.
Competent professionals are often troubled to learn that the baseline is relative to the industry. But what does this actually mean?
"Overall knowledge or capability in a field of science or technology means the knowledge or capability in the field which is publicly available or is readily deducible from the publicly available knowledge or capability by a competent professional working in the field. Work which seeks an advance relative to this overall knowledge or capability is R&D."
"Overall knowledge or capability in a field of science or technology can still be advanced (and hence R&D can still be done) in situations where
several companies are working at the cutting edge in the same field, and are doing similar work independently; or
work has already been done but this is not known in general because it is a trade secret, and another company repeats the work; or
it is known that a particular advance in science or technology has been achieved, but the details of how are not readily available"
"However, the routine analysis, copying or adaptation of an existing process, material, device, product or service will not advance overall knowledge or capability, even though it may be completely new to the company or the company's trade."
A project that is simply applying techniques that are common within that field of science or technology will not qualify, however, if other companies have achieved, or are attempting to achieve, a similar advance, then your project can still qualify.
In many cases, it is not always this clear and it ultimately comes down to the judgement of the competent professional to make the assessment of what will qualify.
We have only seen companies go wrong with this assessment when they attempt to assess a project based upon the business, commercial or functional advance, rather than the scientific or technological advance of the project. Ensuring that the competent professionals are familiar with the HMRC definition of science or technology and that they can clearly articulate why the project seeks to advance overall knowledge or capability is crucial to ensure a robust claim that will stand up to HMRC scrutiny.