Before claiming for R&D tax credits, you first need to prove your businesses eligibility to claim. To do this, you need to meet HMRC’s set of guidelines that define R&D activity. One of the essential criteria for eligibility is identifying that you’ve used a ‘competent professional’ for your project.
But what is a ‘competent professional’, and why are they required for an R&D tax credit claim to qualify?
For more information on HMRC’s definition of eligibility, have a read of our eligibility guide.
What is a competent professional?
A competent manager/professional is someone who has a successful track record and significant expertise in the field in which your business conducts its R&D activity. This might be an engineer for a manufacturing business or a developer for a software company.
They could have acquired this professional competence and relevant experience through higher education, apprenticeships, or industry experience. For many businesses, the ‘competent professional’ is an in-house specialist with enough expertise in the same field as your R&D projects.
In HMRC’s opinion, your company’s competent professional is such a person who has enough technical knowledge to know when R&D activity is necessary. To cite their definition in the Corporate Intangibles and Development Manual, the competent professional must:
- Be knowledgeable about the relevant scientific and technological principles involved.
- Be aware of the current state of knowledge.
- Share accumulated experience and be recognised as having a successful track record.
HMRC also states that it’s not good enough to have an ‘intelligent interest’ or work in the field; the ‘competent professional’ must have the necessary knowledge to qualify. Therefore, a competent professional working on your projects should differentiate between work that is R&D and work that is not.
Eligibility and competent professionals
To be eligible to claim for R&D tax credits, a business must prove that they’ve encountered scientific or technological uncertainties that could only be solved with R&D and not with publicly available information or preexisting knowledge. This is where the ‘competent professional’ comes in, see quote from HMRC below:
‘Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deductible by a competent professional working in the field.’
Considering this, it’s the competent professional’s knowledge and expertise that determines whether a project experienced a scientific or technological uncertainty and could only be solved with R&D.
How the competent professional works in your claim
When submitting your R&D tax credit claim, it’s advantageous to provide relevant information about your competent professionals, including their education, experience and track record. Having as much relevant information as possible will add weight to your technical narrative and give your evidence more clout with HMRC.
In most cases, it will be the competent professional who leads the process of composing your technical narrative. Since they’ve managed your business’s R&D work, they should identify the project you claim R&D tax credits for. The technical narrative will include the issues faced, the decisions made throughout and, of course, the technical uncertainties.
While competent professionals should lead the process, it can be a collaborative process, and other team members can help build out the narrative.
How EmpowerRD works with competent professionals
At EmpowerRD, we’ve created an online platform that allows your team to work in a collaborative way. Multiple users can contribute to the narrative in real-time, which the technical lead can easily monitor. We don’t ask you to write an extended, complex essay. We help your technical team get the most important information down and then our experienced writing team builds this into a valid technical narrative for HMRC.