Step 1: Identify Eligible R&D Activities
The first step in the R&D tax claiming process is to identify the eligible R&D activities that qualify for tax credits. This may include activities such as developing new products or processes, improving existing products or processes, conducting experimental research, or solving technical challenges. It’s important to review your company’s R&D projects and activities to determine if they meet the criteria for R&D tax credits according to the applicable tax laws and regulations.
Step 2: Document R&D Activities
Once you have identified the eligible R&D activities, it’s essential to thoroughly document the details of these activities. This documentation should include technical records, project plans, design documents, test results, meeting minutes, and other relevant information that demonstrates the nature, scope, and technical uncertainties of the R&D activities. Proper documentation is critical to support your R&D tax claim and provide evidence of the qualifying R&D activities conducted by your company.
Step 3: Calculate R&D Expenses
The next step is to calculate the qualified R&D expenses that are eligible for tax credits. These expenses may include employee wages, contractor fees, supplies, software, and other direct costs that are directly attributable to the qualifying R&D activities. It’s important to review the applicable tax laws and regulations to ensure that you are including all the eligible expenses and excluding any non-qualifying expenses.
Step 4: Prepare R&D Tax Claim
Based on the documentation and calculated R&D expenses, you can prepare the R&D tax claim. This typically involves completing the necessary forms and reports as required by HMRC. Make sure to accurately and thoroughly complete the forms, attach the supporting documentation, and follow any specific guidelines or requirements provided.
Step 5: Submit and Review R&D Tax Claim
The final step is to submit the R&D tax claim and await their review. The tax authorities may review your claim, request additional documentation or clarification, and may conduct an audit or examination of your R&D tax claim. It’s important to be prepared to provide any additional information or documentation that may be requested and to respond promptly to any enquiries or audits.
It’s worth noting it’s also recommended to seek professional advice from qualified tax professionals or R&D tax credit experts to ensure that you are accurately claiming R&D tax credits and complying with all applicable laws and regulations.
TBAT can help if your business has a HMRC Enquiry into its claimed R&D Tax Credits – Click here
Within R&D tax credit frameworks, there exist varying degrees of guidance, each with distinct purposes. These are ‘Meaning of Research & Development for Tax Purposes: guidelines’, 'CIRD Manual (Corporate Intangibles Research and Development)' and ‘Guidelines for Compliance’
There were some important announcements made regarding the future of the R&D tax credits schemes both in structure, operation and who can benefit as well as wider investment in R&D in specific sectors.
Assists organisations in accessing research and development grant funding across a range of UK and EU schemes and industry sectors.Get In Touch