Top 5 Tips For R&D Record Keeping For Tax Credits
Solid R&D record keeping not only maximise your R&D claim benefit, they cut claim processing times and create a strong audit trail in case of an HMRC enquiry.
Although the HMRC doesn’t outline specific R&D recordkeeping requirements, they do request a summary of the project, the advances being sought, uncertainties being faced and a breakdown of expenses. Things that a good R&D record keeping process, like the below, would cover.
1. Project List
Start with a list of all the R&D projects your business has carried out over the last 12 months. They could be successes or failures, new product or service developments, product or service changes and even improvements to processes. Remember to look in all departments within the business and not just with the manufacturers and developers.
2. Project Notes
Next expand your list by noting who was involved in each project, what they were trying to achieve and the main challenges and uncertainties that they faced. This information will help establish all qualifying R&D projects and provide the basis of your claim’s case study.
3. Staff Time Recording
Getting a bit more in-depth, try to update a monthly spreadsheet with your best estimates of who was involved in each R&D project and how many days they committed to a project each month. This will help establish the people cost aspect of your claim.
4. Consumable Costs
During an R&D project’s testing and prototyping phase, you can claim against your consumable costs, such as the materials used in prototype construction. If you can, we recommend that you to set up an R&D code within your nominal ledger that you can code these consumable expenses against when they arise.
5. Subcontractor Costs
If you use subcontractors in your business, ensure they clearly differentiate between R&D work and “business as usual” on their invoices. This will enable you to code them separately under the nominal ledger and again help with the costs aspect of your claim.
Although good quality and timely R&D record keeping is advised for a smooth claim process and to create a solid audit trail, if you have no records Amplifi Solutions will work with your team to help uncover relevant projects, costs and to generate a justifiable claim. We will also advise you on steps to take to improve your record keeping, to enable you to maximise the value of future claims.
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