Clarification around reimbursed expenses
There has been some confusion around this aspect of the rules. Firstly, reimbursed expenses means a cost that your employee has paid for that you later give them back. Things like company credit card payments don’t count because the employee is not involved in the interaction.
For eligibility under R&D tax credit schemes, the cost must pay for something that is intrinsically part of the R&D project. Travel and subsistence costs are back on the agenda; benefits-in-kind, daily commute and training are not.
Confusion has arisen because HMRC have made changes to their guidance on reimbursement as qualifying expenditure under R&D tax credit schemes. The first 2009 guidance clearly allowed for employee expenses to be included. An amendment to the rules in 2014 changed the definition of staffing costs, which then referred solely to contractual costs. This excluded employee travel and subsistence expenditure.
In October 2016 this was changed back to the original inclusive definition in a change to HMRC’s online manual for the administration of R&D Tax Relief. Unfortunately, the absence of a retraction left some confusion. This was then resolved in July 2017, when HMRC announced way for companies to claim for the staff costs they excluded from R&D tax relief claims during the 2014-16 period.
Now the main areas of employee travel and subsistence are clearly included as allowable costs for an R&D tax credit claim. This does not include training, benefits-in-kind or commuting costs to and from their workplace. This is background that may not be absolutely necessary.