Sometimes your innovations can be hidden in plain sight

When most people think about research and development (R&D), they picture laboratory research, the development of cutting-edge prototypes or world first inventions. But in reality, some of the most valuable innovation in UK companies happens quietly — on the shop floor, in design meetings, or within production teams refining everyday processes.

These activities often go unrecognised, even though they can meet HMRC’s definition of qualifying R&D under the Research and Development Expenditure Credit (RDEC) scheme.

Recognising this “hidden” innovation can make a significant difference — not just by increasing the value of an RDEC claim, but by strengthening compliance and helping companies capture the full extent of their technical problem-solving.

What counts as R&D under RDEC

Under the UK’s R&D tax relief guidelines, an activity qualifies if it seeks to achieve an advance in science or technology through the resolution of technical uncertainty.

That advance doesn’t need to be groundbreaking — it just needs to extend what’s currently possible or known in your field.

So, if your teams are:

• Improving manufacturing or production processes to reduce waste or energy use,

• Testing material alternatives to meet performance or sustainability targets,

• Developing or adapting software to integrate with complex systems, or

• Refining designs or formulations through structured trial and error,

— you may be conducting R&D without realising it.

Spotting hidden R&D in your operations

To uncover potential R&D activity, ask:

• Did we need to experiment, test, or prototype to find the right solution?

• Were there unknowns about whether a method or material would work?

• Would a competent professional in the field have found this problem challenging to solve?

If the answer is “yes” to any of these, the work may qualify as R&D under the RDEC scheme.

Case studies: Real-world examples of routine innovation

Food manufacturing

A food producer explored a new formulation to improve shelf life without artificial preservatives. Several ingredient combinations failed before the right one was found. To the production team, it was “routine improvement.” To HMRC’s guidelines, it was a clear case of R&D — structured experimentation aimed at advancing food technology.

Engineering and manufacturing

A precision engineering firm developed a modified machining process to reduce tool wear when cutting a new alloy material. Early trials caused vibration and inconsistent surface finishes. After testing different feed rates, tooling geometries, and cooling methods, the team achieved a stable process.

What looked like “process optimisation” was, in fact, R&D: overcoming technical uncertainty to advance manufacturing capability using a new material.

Software and systems integration

A logistics company needed to link an old warehouse management system with a new AI-based routing tool. Off-the-shelf solutions couldn’t handle the data volume, so developers built a custom middleware layer. Several iterations failed under load testing before success.

This was R&D under RDEC — not routine maintenance, but systematic work to achieve a technological advance in data handling.

Why recognising these activities matters

Identifying R&D in operational projects can have three important benefits:

1. Higher claim value: Capturing all qualifying activity ensures a more complete RDEC claim, reflecting the true scale of innovation across your business.

2. Stronger compliance: Routine projects often generate excellent supporting evidence — testing data, production records and technical correspondence that HMRC values.

3. Cultural awareness: Highlighting innovation in day-to-day work encourages teams to document and share technical challenges, building a stronger R&D culture.

How to document hidden R&D effectively

You don’t need formal lab notes to support a strong RDEC claim — but you do need credible, contemporaneous evidence. Useful sources include:

• Trial reports and test results

• Engineering or production meeting notes

• Version histories for software builds

• Emails or messages discussing failed approaches

• Technical drawings or prototypes

Capturing these as part of normal project documentation makes it much easier to evidence R&D if HMRC ever raises a compliance query.

The bigger picture

The RDEC scheme exists to reward innovation — not just in headline-grabbing breakthroughs, but in the steady, practical advances that drive UK industry forward.

If your business is improving how it makes, tests, or delivers products, there’s a good chance some of that work qualifies for R&D tax relief — even if it doesn’t look like “innovation” in the traditional sense.

The next time your team says, “we just solved a problem,” take a closer look. You may have uncovered an R&D project — and a stronger RDEC claim.

If you’d like to explore whether your operational projects could qualify under RDEC, we can help you identify and document those hidden innovations - get in touch to check if your projects qualify.

Visit Claiming RDEC: Index Page.