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.
Submitting your claim
It’s important to note here that, if you’re already making claims and never had an enquiry yet, it’s because HMRC has limited resources and allocate them on a perceived tax risk basis. That doesn’t mean you are never going to get one. An enquiry also becomes more likely if your claims have gone unexamined for a long period.
However, you can minimise the risk of an enquiry by how you present your claim.
If you show that you know the rules, have applied them, and make it easy for HMRC to appreciate this, your claim is less likely to be selected for detailed scrutiny.
Things that you should highlight include awareness of the BIS guidelines and that you’ve framed your claim in line with them.
- Show you are aware of the Corporation Tax Act 2009 legislative requirements for qualifying expenditure.
- Follow the suggested HMRC format for claims – with a narrative explaining the R&D issues, detailing advances, uncertainties, and work done for each project together with an explanation of the costing methodology.
- Use an appropriate sampling technique where necessary to keep workload under control and explain why it is appropriate – this might be in terms of the projects you examine or the ones for which you prepare narratives.
- Identify the competent professional who has made the necessary technology judgements.
- Mention comparable technology benchmarks where available.
- Explain what has been excluded from the R&D claim to show you have applied the rules.
- Check your company website to make sure that it does not contradict what you say about your projects! HMRC are likely to do so.
Sounds daunting – need help?
MSC R&D has been helping companies successfully submit R&D Tax Credit claims since the beginning of the scheme.
Contact us on 0114 230 8401 to discuss your requirements.