R&D technical narrative explained
When it comes to constructing a technical narrative for your R and D tax credits claim, you need to know that the technical data you collect is accurate and comprehensive. It’s also important to ensure you write the narrative in a way that maximises your chances of success. Here, we explore how to support your claim with the best R&D technical narrative possible.
What is a technical narrative?
The technical narrative is supplied alongside your tax relief calculations to explain the project you undertook and the challenges you faced. It’s your chance to show HMRC just how complex and resource intensive your activities were and why you qualify to be remunerated for your efforts.
When beginning the narrative construction, a few simple questions need to be answered. For example, how will you refer to the project? Give the activity a name that’s easy for the reader to identify. When did the work start and finish? Remember, new challenges need to be faced and worked on each year for the project to be eligible for relief.
You’ll also need to be able to summarise what the project was about – the objectives, the challenges and the methods you used to meet them. Detail any tools or platforms you used or created and ensure you cover the actual challenges rather than documenting process problems. You may need help from engineers, scientists or other professionals for this.
Finally, you’ll need to touch on the market position of your product and how it differs from competitors’ offerings in order to be awarded research and development tax credits.
Writing your narrative
As the name suggests, the narrative needs to be written from a technical viewpoint and consider the technical obstacles presented, rather than process-based issues. It’s important, of course, to demonstrate how difficult the project was, but don’t over-egg the pudding. Bear in mind that HMRC receives thousands of applications each year, so focus on the key challenges and features of the activity.
Match the finances to the technical data
You’ll have to prove how your business spent money on the project in order to successfully claim R and D tax credits. It may seem obvious, but ensure your technical narrative is an account of the activity you provide the figures for, otherwise questions will be raised about the application. Ensure you can account for as much of your qualifying expenditure as possible – staff wages, utilities, consumables etc. – to maximise the value of the claim.
Assistance with your technical narrative
At R&D Tax Solutions in Manchester, our tax specialists have a wealth of experience supporting businesses in a range of sectors with R&D tax credit claims. Whether you need help with your technical narrative or require someone to check your calculations, we can help. Contact us today for expert advice.