Checklists for R&D Success
Use this R&D checklist to ensure you are not missing anything when working out your R&D costs.
Checklist 1: Are you identifying your maximum level of R&D costs?
We have compiled this checklist because we have found that a significant number of companies are under-claiming their R&D tax relief and credits. This is usually due to misunderstandings or misinformation about what activities and costs can be included as R&D costs.
In HMRC's definition Research and Development takes place when a company seeks to 'make an advance' - this includes seeking to develop a new or significantly improved process, material, device, product or service by applying science and/or developing technology. The definition of science for R&D claims relates to the physical world of things (not arts, humanities and social sciences). And technology is the hardware, software, machinery and equipment that companies use to run their business and create products and Cservices.
How to do what needs to be done to 'make the advance' must not be obvious, or easily worked out, or readily available if researched, as if it is there is no R&D needed. So your R&D projects and activities should involve some experimentation or unknown factors that will need to be resolved to achieve the intended advance. There are referred to in R&D guidance notes as 'scientific and technological uncertainties'.
The checklist: You should be able answer YES to all relevant questions
1. Have you included costs for all failed and all successful R&D projects and activities?
2. Have you included costs for all R&D projects where you held the financal risk - including:
- Internally resourced projects e.g. development of things to sell or use in your business?
- Client commissioned projects where fees were only payable on success?
3. Have you included the cost of paying for internal staff time undertaking activities focused on:
- Creating or adapting software, materials or equipment needed for your R&D?
- Planning and management of scientific or technological development activities?
- Design, testing, analysis undertaken to resolve scientific or technological uncertainties?
- Scientific and technical information services including writing reports on results of R&D?
- Security, admin, clerical, finance and personnel activities in support of your R&D?
- Sourcing and maintaining laboratories and R&D equipment and computers?
- Training staff to directly support an R&D project, or university based research?
- Research and related data collection to devise scientific or technological testing, survey, or sampling methods or feasibility studies to inform R&D strategic direction?
4. Did your staff costs include gross salary + emp'ers NI + company pension payments?
5. Have you included agency staff time spent on any of the above activities?
6. Have you included the cost of energy or materials consumed in doing R&D?
7. Have you included the cost of software licences for software used in R&D?
8. Have you included reimbursed staff travel or subsistence expenses on R&D?
9. Have you included your subcontractor* costs where the contractor was:
- Involved in directly carrying out R&D activities (not project management or admin)?
- Involved in analytical testing to support your R&D e.g. testing a material or substance?
10. Have you included payments to subjects of Clinical Trials?
*Note as a general rule, only small and medium enterprises (SMEs) can claim subcontractor costs.
Are you ready to find out if you qualify or how much your R&D claims could be worth?