Simple Steps Towards Successful R&D Tax Relief Claims
Date: 6th January 2014
The experience of completing a successful UK R&D tax credits claim should be straightforward however, gathering and presenting the technical details to support the claim can be a tough challenge for accountants. The claims process is part of the normal treatment of providing the necessary annual accounts information to HMRC, and the qualifying expenditure should be shown as an adjustment to the profit figure on which tax is calculated. Only the qualifying figure is needed for tax purposes, but you should maintain a record of how that figure has been calculated, and be prepared to show back up documentation such as payroll and invoicing information.
Any resulting HMRC inquiries can be as time-consuming as they are stressful because of their frequent updates and changes in the strict guidelines for HMRC R&D tax credits. There are certain steps to be taken that will make sure that the inquiry goes smoothly without any obstacles.
It’s crucial to make sure that everyone involved thoroughly understand R&D tax relief process and what it entails. A pre-audit meeting can be arranged with clients to define the details of the eligible projects. The HMRC expects businesses to be able to justify their applications clearly. Prepare all the supporting documents in advance for a better claim. Many of the audits we carry out on previous R&D Tax Credit claims show that companies have underestimated the qualifying expenditure – therefore the full financial benefit has not been obtained. We can help you check this out before it is too late to correct it – with a fee only being charged where underclaiming is successfully corrected.
Build a Rapport with HMRC
For a smooth research and development tax credit claim, make sure that you explain or present your projects in a simple non-technical yet informed manner that can be easily understood by the HMRC personnel. As well as your financial team, sit with your technical team to simplify the complex technical details. The taxmen from HMRC are also people and it can be a very beneficial process to build a good rapport with them. Always make sure to follow the guidelines along with financial and technical deadlines.
Support Your Claim
The HMRC team is not infallible and may require help to understand your exact circumstances. They may at times not understand your claim when making the research and development tax relief assessments. You must have confidence in your claim to make them understand that the proposed project is eligible through appropriate technical documents and back up.
Engage an Able Assistant
The relief claims of R&D tax can be lengthy and technically challenging. Our role is to investigate the scope of your R&D work, make sure you understand the qualifying conditions, review the technical aspects of qualifying projects and help you produce draft justifications for submission with the Corporation Tax claim.
We do not take over the role of the accountant who is the Corporation Tax specialist, but will help in any way we can including dealing with any questions from HMRC in relation to R&D qualification.
Recognising and scoping R&D for Tax Credits requires a detailed knowledge of the HMRC Guidelines and wide experience of successful claims. Our consultants have been 100% successful over 12 years and claims relating to more than 1000 projects.