Partner Article

Best practice for improving performance of R&D tax relief claims

There is no substitute for experience when it comes to a successful R&D tax relief claim. Whilst the financial side of a claim comes as second nature to accountants, gathering the required technical details in support of the claim can be more challenging.

Companies expect a level of cost and time efficiency that can only be achieved through knowing precisely what information to gather and the most effective way of presenting it to HMRC. The R&D tax relief legislation guidelines are a good starting point, however they are long, complicated and subject to regular refinements; deciphering them can often demand time and effort in unbillable hours.

In the last guide of our BEST PRACTICE series, we breakdown the main reasons for complications in the technical side of the claim process and highlight the kind of approaches that can maximise claims, allowing accountants to use their time as efficiently as possible.

Speaking HMRC’s language

HMRC expects the technical reports for R&D tax relief claims to be presented in very simple terms and this can be difficult when explaining the hugely technical details that make up a company’s eligible projects. Simplifying complex ideas in order to present them to the uninitiated cannot be done successfully without a thorough under- standing of the technology. Spending time with the company’s technical people, rather than the financial people, and developing a true understanding of the R&D is a hugely beneficial process. It is not uncommon for this approach to uncover areas that had not previously been considered and would not have presented themselves otherwise. Equally, knowing the right questions to ask is important – they should be technical in nature and framed around the intricacies of HMRC’s guidelines, whilst answers must be presented in a language HRMC understands – a tricky balance to get right.

What HMRC doesn’t want

Many companies are unfamiliar with the process of claiming for R&D tax relief, which can make acquiring the necessary technical detail extremely difficult. Often, companies will provide marketing information, placing emphasis on the quality of their product and whilst this certainly serves a purpose for background information, it is not enough to satisfy HMRC’s criteria. Instead, the focus should be on the problems encountered during product development. Making technical people aware of the specifics of the HMRC guidelines can help them to provide the best possible information to support their claim.

Don’t expect help from HMRC

The HMRC guidelines are just that – a guide. There is no ‘How to…’ document breaking down the stages of making a claim; whilst HMRC’s guidelines provide information on its definition of R&D, they do not provide information on the processes involved in putting a successful claim together.

The best way to put together a successful claim is to work with an R&D tax relief specialist, like Jumpstart, who have the benefit of a deep understan- ding of HMRC’s guidelines and years of experience of making R&D tax relief claims. The result is a smooth, efficient process with a maximum return duly secured.

This was posted in Bdaily's Members' News section by Jumpstart Ltd .