Navigating the complex R&D tax relief rules to make a successful claim can seem daunting, especially for first-time claimants. This article provides key guidance to help businesses get started on the right foot. With the right professional support and understanding of the requirements, claiming R&D tax relief does not have to be difficult. A specialist advisor can steer companies through the process from start to finish, handling technical submissions and liaising with HMRC on your behalf.
However, following a few simple steps can maximise your chances of a smooth claim process and boost the relief you are entitled to.
1. Involve the Competent Professional in the preparation of the claim.
HMRC wants assurance that those guiding R&D have suitable expertise to judge work against current scientific or technological knowledge. Therefore, you must ensure the competent professional is involved in the conversation with your R&D advisor.
Without competent professionals leading the R&D project(s), claims lack viability, as uncertainties identified by less qualified staff lack credibility. For instance, a Finance Manager is expected to have expertise in areas like financial planning, cash flow analysis, budgeting, financial reporting and more. However, they would lack the requisite qualifications and experience to articulate the technological uncertainties in a nanotechnology project.
HMRC expects competent professionals guiding projects to have substantial expertise in relevant scientific or technological fields. This typically means holding advanced qualifications paired with years of hands-on experience. For instance, while an A-Level in Biology shows interest in science, it does not demonstrate deep competency in advanced genetics. In addition to advanced degrees, competent professionals must back up qualifications with proven field experience. HMRC looks for years spent actively researching, developing innovations, and pushing technological boundaries in the specific specialty.
2. Read the BEIS Guidelines.
Whilst tax advisors are indispensable for steering companies through the process, it is critical that the competent professional leading the R&D activities also has a solid grasp of the official Guidelines on qualifying R&D activities for tax purposes, and ask the tax advisor for further clarification where needed. Given tightening compliance enforcement, attempting submissions without comprehensively reviewing the Guidance is very precarious. Understanding the criteria at the outset enables appropriate project documentation.
3. Gather Project Details.
If your existing records do not capture all of the project details, ask the competent professionals to refresh their recollection of the fine-grained project details before speaking to the advisor. A seasoned tax advisor will know which questions to ask and how to help shape a compelling narrative for HMRC. However, they cannot fabricate R&D activities.
The types of project information it would be useful to collate include:
- An overview of the current state-of-the-art at the start of the project and an explanation as to what the gap in knowledge was that your project is seeking to fill;
- An understanding of the advance in the field that you were to seeking to achieve;
- Details of the scientific/technological uncertainties you faced in the development work; and
- A step-by-step analysis of the steps that you took to overcome the inherent uncertainties in the project.
Whilst gathering project details, remember that a project does not have to be successful in order to claim R&D tax relief. Furthermore, the project does not have to be completed in the period under review.
At Crowthers Accountants, our team of experienced R&D tax specialists have supported hundreds of claims from start to finish. We guide companies through every step, from sharing explanatory guides showing examples of R&D / Non-R&D work and discussing with your team to facilitate a clear understanding of the rules, documenting scientific or technical uncertainties and compiling watertight submissions to liaising with HMRC if enquiries arise. If you believe your work may qualify for R&D tax relief, contact us for a free consultation today. Our expertise strengthens compliance, maximises relief and readies your company for increased scrutiny ahead.