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Research & Development FAQs

How intense are the record keeping requirements for an R&D tax credit claim?

HMRC have a very reasonable approach to the records they require as evidence to support your R&D tax credit claim. They have not imposed a one-size-fits-all structure as no two companies, or R&D projects, are exactly the same. They have also built in leniency for those who are making and R&D tax credit claim for the first time.

Your first R&D claim

When you first submit and R&D tax credit claim, there is every chance that you are looking at the whole thing retrospectively and didn’t necessarily realise you were actually doing R&D at the time. This means that you probably don’t have a record keeping system up and running that specifically provides evidence for the R&D projects.

HMRC acknowledges this and we can help you build your R&D tax credit case based on your other existing business records. Your project will most likely be evident across several other monitoring systems in your company. It may be more difficult to optimise your claim, especially if you are looking at projects from three years ago. But not having designated R&D records doesn’t stop you from submitting your claim altogether and that is only a good thing.

Future R&D tax credit claims

Once you become a regular R&D tax credit claimant, HMRC begins to expect more of your record keeping systems. Ideally, they want to see records that are compiled as you work through the project (contemporaneous). Think through what evidence you are going to need and how you are going to collect it from the start of your R&D project. Establish a record system that is followed from beginning to end and you will have everything you need for your claim.

Some elements are trickier to quantify. For example, proportioning staff costs depending on how much of their work time was spent on actual R&D work. This could be alleviated by the simple introduction of timesheets, which staff use on a daily basis. Then when it comes time to total your staff costs, all the numbers are easily accessible and you just have to make the final calculations.

HMRC are not asking for records that have just been invented to support your R&D claim. You just need to work out an efficient, manageable system that accumulates all the records you need to maximise your R&D tax credit claim.

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