The Records you Need to Keep for R&D Tax Credit Claims

There isn’t a particular method of record keeping that needs to be implemented to claim R&D tax relief. This is because every company operates differently and carries out its research in a unique manner. That being said, you must provide some form of evidence to HMRC that meets their qualifying criteria.

The R&D tax records you send to HMRC must explain the following:

• Proof that your project is being undertaken to make a scientific or technological advancement (excluding social sciences and theoretical fields)

• Proof that the project had to overcome an uncertainty

• Proof that your project attempted to overcome said uncertainty (it doesn’t necessarily have to succeed)

• Proof that your project couldn’t be easily executed or worked out by a professional within the field

If you can’t explain the above, HMRC may not consider your project R&D and therefore may reject a relief claim. With this in mind, it’s imperative you keep notes. There are no specific forms or structures to follow, but a lot of companies keep log sheets detailing time spent on the project and associated costs.

Types of R&D tax relief

There are two main types of R&D tax relief:

• SME R&D tax relief

• Research and development expenditure credit (RDEC)

If you have less than 500 employees and have a turnover of less than €100 million or a balance sheet totalling less than €86 million, you may qualify for SME R&D relief. Through it, you can take an additional 130% off your qualifying annual profit on top of the standard 100%, equalling a 230% reduction. You can also claim tax credit if your company makes a loss up to 14.5% of the surrenderable loss total.

Previously known as the large company scheme, RDEC is for companies who are subcontracted to carry out R&D tasks by a larger company, as well as for general large companies. The current tax credit stands at 13% under RDEC.

How Accountancy Cloud can help with R&D tax relief claims

Managing R&D tax credit claims on top of other tasks can be a headache, especially as there’s no clear guidance on what to submit to HMRC. At Accountancy Cloud, our team of experts can help you manage your R&D claims by spotting potential expenses, handling your year end filing, and overseeing the claim to completion, ensuring you get the money you’re entitled to.

To learn more about how we can help you with R&D tax credits, please contact us.