Work to fix technical problems created by Magento software updates is likely to qualify for tax relief, provided it is carried out before the official patches are released, R&D tax credit experts Jumpstart have confirmed.
The firm has made successful claims on behalf of a number of developers following the launch of a new version of Magento, the most widely used e-commerce software, in November 2015. Magento 2 failed to work with some versions of PHP, leaving website owners with no option but to try to fix the issue themselves.
Magento issued patches to resolve the problems in both January and June 2016 and released a new version, Magento 2.1, in the same month. In May this year it has also released a patch to support new bank card numbers issued by Mastercard.
Paul Barton, a technical analyst and software specialist with Jumpstart, says: “With the launch of any new software, there can be unexpected and unpredictable issues and as it becomes more widely tested by users, more issues come to light. Often the new version fails to work with other technologies, which creates problems for those with websites that integrate different programs and can cause the site to crash altogether.
“At first, the software company itself may not understand what is wrong so it can take some time for it to issue a patch. In the meantime, website owners may have to invest considerable time and money experimenting with different ways to fix the issue, encountering uncertainty as to the solution, effectiveness of their investigation and any wider applicability. This type of work is classed as research and development and will generally qualify for tax relief.
“While we have been seeing a lot of issues relating to Magento and WordPress updates, the same applies to any type of software. However to qualify for tax relief, the work must have been sufficiently challenging, and carried out before an official patch is released, as it is then considered that a solution has been found.”
For the R&D Tax Relief scheme, companies can claim for any eligible work carried out during their current financial year and their previous two financial years. For further details call Ian Wolfendale on 07531 448053.