A Pre-Revenue Seaweed Farming Robotics Start-Up Makes Its First R&D Claim

A young company with one employee and no sales can still have a strong R&D claim. This case study looks at how we handled a first claim for a robotics and AI start-up, including grant funding and a high level of R&D spending.

The client

The client is a London start-up, incorporated in November 2022, that is developing robotics and artificial intelligence to make seaweed farming scalable and affordable. It had a single employee and had not yet earned any revenue.

The challenge

• A first claim in a first period. The claim covered the period ended 30 November 2023, the company's very first accounting period.
• Three early-stage projects. Each needed its own credible technical description.
• Grant funding. The company had received grants in the period, and these had to be reflected correctly in the figures.
• R&D intensity. More than 40% of total expenditure went on qualifying R&D, which affected the relief available.

What we did

Our specialists reviewed three projects: an underwater robot for monitoring the farm, a vision and detection robot using AI, and a data-driven farm operations platform at proof-of-concept stage.

We took the grant funding into account in the claim and checked the costs to decide whether each was capital or revenue in nature. Activities that did not qualify were excluded expressly rather than left unmentioned. Because the technology was new, we also arranged a second-opinion review by an industry specialist from our R&D network. The claim was prepared under the SME scheme rules that applied to that period.

The outcome

• A first claim for a company with no turnover, built on three documented projects.
• Grants reflected correctly, costs checked, and non-qualifying activity expressly excluded.
• A claim that recognised the company's R&D-intensive status.

What it shows

A start-up with no sales can still claim, because the relief follows the R&D and not the revenue. Grants have to be handled with care, and being R&D-intensive changes what the relief is worth. A specialist second opinion adds confidence where the technology is new. For the rules that apply to periods starting from 1 April 2024, see our page on R&D tax credits.

Companies claiming R&D tax relief can find more detail at our specialist practice, R&D Tax Partners.