A quick guide outlining how to successfully completethe ‘Project Selection’ section on the EmpowerRD platform.
📖 The estimated reading time for this article is around 6-8 minutes.
In the ‘Project Selection’ section, you will need to provide us with information relating to your R&D project/s during your claim period. The questions asked in this section reflect the questions in the Additional Information Form (AIF), so it is important to be familiar with this section before completing your final project write-up.
This guide will prepare you for this section, ensuring that you are able to complete the section successfully before beginning the ‘Projects’ section.
Why does the project selection section exist?
In the project selection section, we ask you to confirm how many projects you have during your claim period and also, you will need to confirm your total qualifying expenditure for each qualifying project.
You will need to complete the ‘Project Selection’ section before you can complete the ‘Projects’ section, so it is important to know how many projects you had and how much of your R&D expenditure was spent on each qualifying project before you start this section. If you’re unsure, you can start this section and finalise the details later.
💡 If you started the ‘Projects’ section before, your information will still be there; you will just need to finish the ‘Project Selection’ section first.
How many projects should I include?
You need to tell us how many projects you have during your claim period only, including any ongoing projects. The amount of projects you enter will determine how many projects you need to showcase to HMRC in your claim.
Here are the rules HMRC set:
1-3 projects: You need to provide details for all qualifying projects, including 100% of the qualifying R&D expenditure spent on these.
4-10 projects: You need to provide details for all qualifying projects that account for at least 50% of your R&D expenditure, with a minimum of 3 projects described. All other projects need to be listed.
11-100 projects: You still need to provide project details for those that account for at least 50% of your R&D expenditure, with a minimum of 3 projects described. However, if the total qualifying expenditure is split across multiple smaller projects, you will need to describe the largest 10 projects.
🚨 It is mandatory for all projects to be listed, even if you only need to fully describe some of them.
How do I get started with the new ‘Project Selection’ section?
To begin, there are 3 main steps to complete:
- Setup Project Selection.
- R&D Project Validation.
- Finalise Project Selection.
For the ‘Setup Project Selection‘ step, you simply need to confirm how many projects you have during your claim period. The platform will then start to identify which projects you may have to write about in detail. If you’re unsure, you can still complete this section but you will need to confirm that you aren’t sure about your amount of projects yet.
Once confirmed, you will need to answer some questions about your projects in the ‘R&D Project Validation’ step; this is to validate each project and ensures that the projects qualify for R&D tax relief. Based on your responses, we will be able to validate your projects; this will help us to identify which ones you need to write a project narrative for, therefore it is very important that you answer these questions correctly.
When you have completed the above, you will be able to view your qualifying projects in the ‘Finalise Project Selection‘ step, and you can begin the project selection process. The project selection helper will suggest the projects you should write about, but you can still amend these if needed.
How do I answer the ‘R&D Project Validation’ questions?
There are several questions you need to answer about your project/s; it is very important to answer these questions correctly, as we will use this information to validate your project/s.
💡 It is highly recommended that your CTO or technical lead completes this section, as they are the most likely to be familiar with the project information.
The questions you need to answer are:
“Project Title”
You just need to enter a title for your project that summarises the focus of the R&D. For example, if you worked on a new software integration, you can title it as the software’s name and integration.
“Describe the aspects of your project that qualify for R&D”
Here you will need to write a summary of the aspects of your project that qualify for R&D. You will need to state what your project involved and the ways in which it worked on qualifying R&D activities. This is a descriptive summary, so you will be able to cover more detail surrounding the advances and uncertainties in the other questions.
“Did your project involve a scientific or technological uncertainty that a competent professional in your field could not easily solve?”
It is important to consider any scientific or technological uncertainties that you encountered during your project. While you may or may not have made a successful advance in your field, it is imperative that you show HMRC that you tried to overcome any uncertainties throughout your claim period.
An uncertainty can be encountered when your company did not know if it was possible to create or improve a process or product. Fundamentally, you should not be able to readily deduce how to create or improve a process or product.
In order to demonstrate uncertainties to HMRC, you will need to consider the following:
- What prevented you from being able to know or readily deduce how to create or improve a process or product.
- Why and how this is a scientific or technological uncertainty within your field, not just within your company.
- If a competent professional would have been able to achieve the advance.
You should consider any scientific or technological uncertainties that you encountered during your project. If these meet the above criteria, you should answer this question as ‘Yes’.
“Did your project have a ‘competent professional’ with the relevant knowledge and qualifications to distinguish R&D from routine technical activities?”
A competent professional is the technical project lead. They should be knowledgeable about relevant scientific and technological principles involved in the R&D process, aware of the current state of knowledge in their field and have accumulated experience within that field. This individual usually has a demonstrated successful track record within the field that R&D took place.
It is crucial that we provide HMRC with your competent professional’s details on each project. This demonstrates to the HMRC inspector that they have the relevant experience and/or qualifications to lead a scientifically or technologically complex project. If someone working on your project meets the above criteria, you should answer this question as ‘Yes’.
“Main Field of Science and Technology”
Here you should confirm the main field of science or technology that your project conducted R&D in. These fields can be varied, so it is important to select the field that your R&D most relates to. You will be able to ‘map’ your main industry to a subindustry, so you will still be able to specify your area of science or technology.
✅ For claims with accounting periods from 1st of April 2023 onwards, you can now claim for projects within pure mathematics.
⚠️ Humanities, arts, social sciences and economics projects do not qualify for R&D.
“Project Start Date”
You will need to enter your project’s start date as the date that the project first commenced. If this date falls outside of your claim period due to being an ongoing project, please enter the initial start date and select ‘Yes’ to the “Is your project ongoing?” question.
“Is your project ongoing?”
You will need to confirm if your project is ongoing; your project may be ongoing if it started before your claim period and has continued throughout this period, or if you started your project during your claim period but it is still ongoing.
“Was your project trying to achieve a scientific or technological advance?”
You will need to evaluate whether your project sought to achieve a scientific or technological advance. Advances can be physical, but they can also be in knowledge only. An advance should be considered within your field on a global level, not just within your company or country.
An advance can be found in many different areas and isn’t just limited to creating something brand new. Advances can include:
- Creating a process, material, device, product or service that increases knowledge or capability.
- Improving an existing process, material, device, product or service.
- Using science or technology to copy the effect of a current process, material, device, product or service in a new or improved way.
If you improved an existing process, material, device, product or service, this improvement could result in a more cost or time effective process, or it could result in a reduction of waste. However, improvements in operations would not qualify as an advance under HMRC’s rules, so it is important to consider where your improvements are within the project.
⚠️ Your project does not need to be ‘successful’ in order to qualify. You can still qualify for R&D tax relief as long as you are able to demonstrate how you sought your advance/s, the uncertainties you encountered and that the work wasn’t ‘routine’ and was carried out by a competent professional.
To demonstrate an advance to HMRC, you must be able to showcase the advance you have made in your field. To do this, you will need to provide a description of the advance that you sought and how you tried to achieve it.
If you meet the above criteria and you are able to demonstrate your advance/s in the ‘Projects’ section, you should answer this question as ‘Yes’.
“Did any grants, subsidies or customer funding contribute to the financing of this project?”
It is important to tell us if you received any grants, subsidies or customer funding to finance your projects; this will help us to understand which scheme your projects may fall into. If you received any of these during your claim period and they were used to fully or partially fund your project, you should answer this question as ‘Yes’.
📖 Check out our guide for completing the questions here. <- insert link to What is an R&D Project?
I have more than 3 projects, how do I know which projects to write about?
The platform will identify that you have more than 3 projects and it will request you to confirm how much qualifying R&D expenditure you spent on each project.
You will need to ‘drag’ the slider to the appropriate percentage of your R&D costs; the total percentage should only add up to 100% once you have assigned costs to all of your projects:
Once this has been completed, the ‘Finalise Project Selection‘ section will show you which projects you need to write about. When your projects have been successfully selected, you can click ‘Finish’ and start working on your write-ups in the ‘Projects’ section.
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