How do you determine the extent of R&D involvement for each staff member?

There are a number of methods that can be used to determine the extent of research and development activity carried out by each member of staff when claiming for R&D tax credits. These approaches help companies demonstrate how employee time relates to qualifying work.

Examples include:

• Time tracking tools
• Project management software
• Detailed time sheets
• Employee time logs

These records can help identify the proportion of time spent on qualifying R&D activities, particularly where staff contribute to both R&D and routine commercial work.

We recommend companies to maintain clear and consistent records of employee involvement in R&D projects wherever possible. This will help to support the accuracy of the claim and provide solid evidence if HMRC requests further information later in the claim process.

Some companies may have limited or no records of formal tracking. This scenario is common for first-time claimants or businesses that began their R&D activity before implementing structured record keeping.

In these cases, a reasonable estimate may be required to proceed to the next stages of the process. HMRC recognises that some businesses will not have maintained detailed records from the outset of their R&D projects, provided that any estimates used are based on a fair and justifiable assessment of the R&D activity undertaken.