Making a successful R&D Tax Credits Claim – Top Tips 1

In R&D Tax Credit terms, the definition of a ‘Successful’ claim is one that is both optimised and compliant.

Just ‘winging it’ with a claim is a bit like driving a car with no insurance – not a problem till you have an accident (or in this case a HMRC enquiry which may well cause you to have an accident!)

Three stages to a successful claim

There are three stages to preparing and making a R&D Tax Credits claim – how well you complete these stages will without doubt have an impact on how successful your claim is.

The first is identifying those projects that qualify. Then you need to identify the qualifying expenditure. And then the next stage is compiling that information in the ways HMRC want it presenting to them – into a successful claim document.

Identifying Qualifying Projects

This first of three insights briefly looks at some of the areas often overlooked and also where you need to be cautious when deciding which projects qualify.

R&D is work done to achieve a scientific or technological advance through the resolution of scientific or technological uncertainty.

Sometimes that can be obvious but the definition for relief purposes can be quite broad in its application. The guidelines need interpretation in the light of the facts on the ground.

To help check whether the right amount of R&D is being claimed there are some questions to consider.

For example, have you included:

  • Difficult or failed projects where there was a technology which was core to the problem?
  • Adaptations to existing technology packages requiring customisation?
  • Initial technological analysis for contract pitches?
  • Work to update legacy systems which was technologically uncertain as to the solution?
  • Any ‘engineering’ type work that may not sound innovative, but involved significant problem-solving in bringing different technologies together?
  • Technological problem solving involved in the implementation and scale-up of a development project?
  • All support work that assisted your R&D effort, not just the hands-on technologists?

Where should you be cautious?

  • Was this real R&D? Was the work seeking an advance in science or technology and, if so, what fields of science or technology?
  • Was the work new to the field or did it involve a catch-up? – re-inventing the wheel because you did not know it was out there is not R&D.
  • Was the work technology research or market research?
  • Was your project one of design rather than one requiring the resolution of scientific and technological uncertainties?
  • Are you subcontracting R&D or are you just purchasing a suitable product from an expert provider?

With R&D Tax Credit claims – it is easy to get it wrong and much harder to get it right.

To ensure that we don’t overlook any qualifying projects, MSC R&D’s team of technical and financial experts drive the process – we ask our clients what ‘work’ they do first and then we drill down and establish where the qualifying R&D is, leaving no stone unturned in our search.

This way we get the optimum results for our R&D Tax Credit clients.