Claim R&D tax credits, the right way

A project qualifies when it seeks an advance in science or technology and involves resolving scientific or technological uncertainty. If a competent professional could not readily work out the answer from existing knowledge, and your team had to investigate, test or experiment to find out, that work is R&D in HMRC’s terms.

The advance has to be in the overall field, not just new to your company, and it must be in science or technology rather than the arts, humanities or social sciences. It does not have to be ground-breaking. Making a process faster, more reliable or cheaper in a way that was not obvious counts, and so does work on software, materials, engineering and manufacturing methods.

Preparing the claim usually takes two to four weeks from your first consultation, depending on how quickly we can gather project information and cost data from your team. That covers the technical narrative, the cost breakdown, the Additional Information Form and the figures for your Company Tax Return.

Once filed, HMRC aims to process most claims within about 40 days, though this can stretch at busy times or if the claim is selected for review. Payable credits are paid by bank transfer once processed. End to end, most of our clients see the benefit within 8 to 12 weeks of the first conversation, and we keep you updated at every stage.

Yes. R&D tax relief rewards the attempt to resolve technological uncertainty, not the outcome. If your team tried to achieve an advance and could not, or the project was abandoned because the technical problems proved too hard, the qualifying costs incurred during that work are still eligible. In many cases a failed project is stronger evidence of genuine uncertainty than a successful one.

What matters is that you can show what you were trying to achieve, why it was uncertain, and what you did to find out. Keep records of the approaches you tested and why they were rejected. Costs after the uncertainty is resolved, or after the project is shelved, do not qualify.

The most common triggers are claims that do not clearly explain the scientific or technological advance, that describe commercial or routine work as R&D, or where the costs do not reconcile with the company’s accounts and PAYE records. A missing or thin Additional Information Form, a sudden jump in claim size and a first-time claim without a Claim Notification Form also attract attention.

HMRC has expanded its compliance teams and now checks a far higher proportion of claims than it did a few years ago. A well-prepared claim with a clear technical narrative, a defensible cost apportionment and supporting records is far less likely to be selected, and much easier to defend if it is. We handle any enquiry on your behalf at no extra cost.

Yes, supporting evidence is required. Every claim must be supported by an Additional Information Form that describes each project’s advance and uncertainties and breaks down the qualifying costs by category. Behind that, HMRC expects a technical narrative, a cost apportionment showing how staff, subcontractor, consumable and software costs were split to R&D, and a tax computation that carries the relief into the CT600.

You do not need formal lab notebooks. Timesheets, project plans, test results, version histories and design iterations are all acceptable evidence. Where records are thin, we can help reconstruct them from what you have, though contemporaneous records always make a claim easier to defend if HMRC enquires.

Yes. You can claim for any accounting period that ended within the last two years, because the deadline for amending a Company Tax Return is two years after the period end. In practice that means the current period and the two before it are usually open.

There is one catch for first-time claimants. If you have not made an R&D claim in the previous three years, you must file a Claim Notification Form within six months of the accounting period end. Without it, HMRC will reject the claim for that period even if the two-year window is still open. So an older period may already be closed to you if the notification date has passed, while the most recent period may still be claimable if you act quickly.

No. Eligibility depends on the nature of the work, not on how your business is organised. You do not need a patent, a laboratory, a dedicated R&D department or staff with research in their job titles. Many successful claims come from engineers, developers, production managers and founders solving technical problems as part of their normal work.

What HMRC does expect is that a competent professional oversaw the work and can explain the advance sought and the uncertainties faced. That person is named on the Additional Information Form. Owning the intellectual property is no longer a requirement either, so work done under contract or for a client can still qualify, subject to the subcontracting rules.

Yes. Under the merged scheme a loss-making company receives the 20% expenditure credit as a cash payment after a notional tax deduction, giving a net benefit of 16.2% of qualifying spend. If you are a loss-making SME and R&D is at least 30% of your total expenditure, you may qualify for Enhanced R&D Intensive Support instead, which is worth up to 27%.

Payable credits are subject to a cap based on your PAYE and National Insurance liabilities, set at £20,000 plus three times your annual PAYE and NIC bill, with an exemption for companies creating their own intellectual property. Losses can alternatively be carried forward against future profits if that gives a better result, and we will model both options for you.