Do I need documents to claim R&D tax credits?
Businesses that are familiar with R&D tax claims will know that it’s necessary to provide HMRC with records that demonstrate costs incurred and the eligibility of the claim. R&D records are thus an important part of the process and should be kept accurately throughout the project’s lifetime. But what if you don’t have specific records to support your submission? We explore how you can still make a successful claim without them.
How to claim with no R&D records
Although records specific to your R&D activity are important for claiming research and development tax credits, all is not lost if you don’t have them. It’s not uncommon for businesses to be unaware at the time of the activity that what they are doing qualifies as R&D for tax purposes. Regardless of this, there are likely to be trails of the project within your more general business records.
The first step is to identify the costs involved with the R&D project. The online HMRC research and development guidance outlines these, with key categories being employee wages, consumables, utilities and subcontracting costs.
Next, you’ll need to identify how to attribute these costs to your R&D activity. To successfully claim R&D tax credits, the expenditure must be an ‘appropriate proportion’ of your total costs. Getting help from R&D tax specialists will help you to apportion your expenditure correctly and make as accurate a claim as possible from the information you have gathered.
R&D records for future projects
In order to have the best chance of success with your future R&D tax credit claims, it’s advisable to start keeping contemporaneous records which can be supplied with your CT return. Companies making their first claim are typically afforded some flexibility, so you shouldn’t rely on the above method to see you through for every submission.
There’s a benefit to your business in keeping real-time R&D records too. Not only is it easier to complete the claim, it can often result in the value of your claim being increased. Instead of relying on estimates from old records, you can calculate your exact expenditure on the R&D project and receive the full remuneration to which you’re entitled.
How to keep R&D records
Timesheets are the system preferred by HMRC when it comes to supporting documentation, but this is by no means the only acceptable format. A business could, for example, submit quarterly reviews of the activities they are engaged in, complete with notes on the nature of the work. Minutes from management meetings where reviews of R&D staffing occurred can also be submitted.
Help with your R&D tax claim
If you think you have projects that are eligible for R&D tax credits, or need help to compile the relevant documentation for your claim, contact R&D Tax Solutions today. We work with businesses across a range of sectors, from aviation to medicine, to ensure they can maximise the value of their claims. Visit our offices in Manchester or call us on 0161 298 1010 today.
