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Expectations of claimants (part 2)

Published 31 October 2023

Before you make any claim for R&D expenditure

HMRC expect you to have taken the following steps.

A competent professional, or competent professionals, in the relevant field of science or technology should:

1. identify projects that sought to create new knowledge or capability
2. confirm that these projects relate to a qualifying field of science or technology, briefly explaining how each project is a part of the identified field
3. name the exact uncertainties the projects were seeking to resolve
4. explain why the answer to each uncertainty was not readily deducible
5. briefly set out both:
   • the state of relevant knowledge or capability in the field
   • why resolving these uncertainties would represent an advance in the the overall knowledge or capability of the field at the time the work was undertaken
6. identify exactly where each uncertainty began and would end
7. briefly explain how the approach to resolving each uncertainty or group of uncertainties was a project or sub-project
8. set out the plan for resolving each uncertainty or group of uncertainties
9. set out the steps your projects took to resolve each uncertainty, from the beginning of the qualifying project to either:
   • the end of the accounting period
   • the date the project ended if that is earlier

The company or its agent should then, supported by a competent professional as needed:

10. identify the activities that directly contributed to resolving each uncertainty as part of each project to advance a qualifying field of science or technology

11. identify qualifying indirect activities that were part of the project and are listed in paragraph 31 of the DSIT guidelines

12. identify the qualifying costs of the qualifying activities from its records,

13. check if any of the costs of qualifying activities are restricted or disallowed by GAAP, the DSIT guidelines or tax law

The meaning of ‘competent professional’ is defined in the ‘Importance of a competent professional’ section of these Guidelines for Compliance.

The facts of an R&D claim always remain the company’s responsibility, even with professional advisers involved. Only the business fully understands the work undertaken.  Keeping a record to show you or your agent have followed the 13 steps and you are satisfied the results are correct will help your company reduce the risk from incorrect claims. Some companies can apply for advance assurance that their claim is correct.

More information about claims

For accounting periods beginning on or after 1 April 2023, some companies will need to notify HMRC if they are planning to make an R&D claim.  If you do not submit the claim notification on time, any R&D claim you make in your Corporation Tax return will be removed.

From 8 August 2023, all companies must complete and submit an additional information form to HMRC to support your claims for R&D additional deductions or expenditure credit.  If you do not submit the additional information form, any R&D claim you make in your Corporation Tax return will be removed.

In all cases, you must be able to supply a short summary that describes:

• the field of science or technology that the project relates to
• the level of knowledge or capability that existed at the time the project started and which the company intended to advance
• the advance in that scientific or technological knowledge the company aimed to achieve
• the scientific or technological uncertainties that the company faced
• how your project sought to overcome these uncertainties
• which R&D relief you are claiming and the amount of the qualifying expenditure for each project

The additional information form gives more detail of what must be submitted. If you read these GfC and keep good written records of your projects, this will help you complete the form.