Submitting an R&D claim can be a stressful process for organisations, so once the job is done and the money from HMRC comes through, a wave of relief usually follows. But it’s not always a done deal, as the defensibility of the claim remains in question as the full force of HMRC’s scrutiny is put into effect.
Payment is not the same thing as approval when it comes to R&D claims, as enquiries can often follow months after the payout. So businesses need to ask themselves, are your claims compliant or truly defensible?
What a compliant claim looks like
As a rule of thumb, this is the basic level of a successful R&D claim, in that it satisfies HMRC’s published requirements. Key ones to note are:
- Prove a genuine scientific or technological uncertainty
- Submit a Claim Notification Form (CNF) on time
- File a correct Additional Information Form (AIF)
- Get contracted R&D work right
- Watch overseas costs as most overseas R&D expenditure is now disallowed
- Keep contemporaneous evidence, like records of uncertainties and how they were investigated
Meeting all these requirements is enough to get the claim out the door and for HMRC to issue the payment before it conducts a more thorough assessment. But making your claim compliant, doesn’t automatically equate to it being defensible.
What determines defensibility
Building a compliant claim is like developing the foundations to a building that’s robust on paper, without going through the appropriate tests to check its genuine stability. When it comes to collating a defensible claim, is starts with a structured process, ensuring everything is covered, from qualifying activity at project level and costs reconciled against the P&L, to technical narratives by the people doing the work and reviewed by specialists, and every line client-verified before submission. This should include:
- A strong technical narrative that separates technological uncertainty from commercial challenge
- Judgement behind the claim needs to come from a credible professional
- Records made as uncertainties arose carry far more weight than post-project recollection
- Staff time on R&D activities and materials used should be tracked in real-time
- Full consistency across the AIF, technical report and CT600 figures
- Choose the right scheme, whether the merged R&D scheme, Enhanced R&D Intensive Support (ERIS) or R&D-intensive SMEs (30% intensity threshold)
Choose accuracy every time
EmpowerRD’s all-time HMRC enquiry rate is below 5%, against an industry backdrop where one in five claims now attracts scrutiny. You don’t get that level of assurance by prioritising compliance over defensibility.
The team consists of ATT-qualified specialists and ex-HMRC inspectors, with a dedicated Claim Quality Team reviewing every submission, and a client-facing platform that allows the business to see its claim being built in real time and access a full audit trail.
Nothing is filled in from call notes.
Nothing is submitted without client sign-off.
Nothing is assumed.
Every qualifying item is verified.
How confident are you that your current claim would survive an HMRC enquiry?
Most companies that have worked with generalist accountants to submit their claims won’t have the same level of assurance. They assumed their provider brought enough rigour, but HMRC’s scrutiny has intensified, so that assumption carries more risk than it used to.
Compliance gets the claim submitted, but defensibility is what keeps the enquiries at bay.
To get started building your defensible R&D claim, speak to our team.
