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Expectations of claimants (part 2)

Updated 19 December 2024

Before you make any claim for R&D expenditure

HMRC expect you to take the following steps when you make your claim to Research and Development (R&D) credits or reliefs. Following these steps will also help you to complete the additional information form that is required to support all R&D claims.

A competent professional, or competent professionals, in the relevant field of science or technology, should:

1. Identify projects that sought to create an advance in scientific or technological knowledge or capability.
2. Confirm that these projects relate to a qualifying field of science or technology, briefly setting out how each project is a part of the identified field.
3. Name the exact uncertainties the projects were seeking to resolve.
4. Explain why the answer to each uncertainty was not readily deducible, or readily resolvable, by a competent professional in the field.
5. Set out briefly, but sufficiently to identify you were seeking a scientific or technological advance, both:
   • the level of knowledge or capability, relevant to the advance sought, that existed in the field at the time the project started
   • why resolving the identified uncertainties would represent an advance in the overall knowledge or capability of the field at the time the work was undertaken
6. Identify the point when you found an uncertainty.
7. Identify the point the uncertainty was, or is expected to be, resolved or the point when you concluded no resolution was possible.
8. Briefly explain how the approach to resolving each uncertainty or group of uncertainties was a project or sub-project as defined by part 4 of this guidance.
9. Set out the plan for resolving each uncertainty or group of uncertainties.
10. Set out the steps your projects took to resolve each uncertainty, from the beginning of the qualifying project to either:

• the end of the accounting period
• the date the project ended, if that is earlier

Following steps 1 to 10 will help you to identify project activities that may qualify as R&D for tax purposes.

The company or its agent should then, supported by a competent professional as needed:

11. Identify the activities that directly contributed to resolving each uncertainty as part of each project to advance a qualifying field of science or technology.

12. Identify qualifying indirect activities that were part of the project and are listed in paragraph 31 of the DSIT guidelines.

13. Identify the qualifying costs of the qualifying activities from its records.

14. Check if any of the costs of qualifying activities are restricted or disallowed by generally accepted accounting practice (GAAP), the DSIT guidelines or tax law.

Following steps 11 to 14 will help you to identify the amount of your claim to R&D credits or reliefs.

Part 4 of these guidelines will help you to understand each of the concepts necessary to follow the steps. The meaning of ‘competent professional’ is defined in part 3 of these guidelines.

The facts of an R&D claim always remain the company’s responsibility, even with professional advisers involved. Only the business fully understands the work undertaken.  Keeping a record to show that you or your agent have followed the 14 steps and you are satisfied the results are correct, will help your company reduce the risk from incorrect claims. Some companies can apply for advance assurance that their claim is correct.

More information about claims

For accounting periods beginning on or after 1 April 2023, some companies will need to notify HMRC if they are planning to make an R&D claim.  If you do not submit the claim notification on time, any R&D claim you make in your Corporation Tax return will be invalid.

From 8 August 2023, all companies must complete and submit an additional information form to HMRC to support your claims for R&D additional deductions or expenditure credit.  If you do not submit the additional information form, any R&D claim you make in your Corporation Tax return will be invalid.

In all cases, you must be able to supply a short summary that describes:

• the field of science or technology that the project relates to
• the level of knowledge or capability that existed at the time the project started and which the company intended to advance
• the advance in that scientific or technological knowledge the company aimed to achieve
• the scientific or technological uncertainties that the company faced
• how your project sought to overcome these uncertainties
• which R&D relief you are claiming and the amount of the qualifying expenditure for each project

The additional information form gives more detail of what must be submitted. If you read these Guidelines for Compliance and keep good written records of your projects, this will help you complete the form.