How to build an R&D tax credit claim

R&D Tax Credit Claim

A successful R&D tax credit claim can be significant and significantly contribute to supporting innovation for any business going forwards. However, changes that have been made by HMRC to the claims process in recent years have made it increasingly more difficult for firms to ensure a successful outcome to a R&D tax credit claim. That’s why it’s so important to ensure that you build the best possible claim before submitting it.

Our tips for building your R&D tax credit claim:

  • Keep regular records – These don’t have to be daily records but they should be periodic notes of the challenges that you’ve experienced with R&D and the projects the business is funding. For most enterprises, doing this every quarter will be sufficient. It’s much more effective to commit to doing this regularly than to try and remember all the information at the end of the financial year.
  • Make sure you include all qualifying expenditures – There can be some confusion over what counts as a qualifying expenditure under an R&D tax credit claim, which leads some companies to underclaim. It’s important to get clear on what is eligible, whether you do that with the support of experts, or spend time working through the options internally. That way you’ll ensure that the business isn’t missing out on valuable income – or claiming for costs that aren’t relevant.
  • Track all the costs you’re going to include – When you know what costs your claim will cover, it’s key to ensure that you track the costs and expenses over the course of the year so that you have an accurate record of what has been spent. This task requires a level of detail, such as every hour and unit of staff and materials. Doing this regularly not only ensures that the figures are accurate but also that you’re not trying to work out what percentage of staff salary etc should be included at the end of the year.
  • Don’t forget the technical narrative – Although it can seem like a successful R&D tax credit claim is all about the numbers that’s not the case. A strong claim also requires a compelling technical narrative that delivers an overview of the R&D projects and justifies the total expenditure. This isn’t a compulsory requirement for submitting a claim but it helps to provide a complete picture that is more likely to make a submission successful so it’s something that is highly recommended.
  • Review the claim before submitting it – One thing guaranteed to slow down a claim or result in rejection is where there are mistakes or inconsistencies. So, it’s key to check and then check everything again.

Find a partner

An R&D tax credit claim can be a vital part of generating a return on the investment your business makes in innovation. These tips will help ensure that your claim has the best possible success. You can find an SPRK-approved advisor here.

 

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