.png)
Claiming R&D tax credits can be a daunting and often complex process for companies, yet they remain pivotal in supporting and incentivising innovation within the UK for businesses of all sizes.
RCK Partners’ R&D claim process is underpinned by a client-centric approach, designed to be as streamlined and secure as possible. It helps clients navigate the complexities of HMRC’s eligibility criteria both accurately and efficiently, in turn helping to minimise their tax liability through either a reduction in tax paid on profits or a cash injection into the business.
There are five core steps to the R&D tax claims process:
For a full breakdown of HMRC’s process, view our Guide to HMRC R&D tax credits claims.
A company must submit an R&D tax credit claim within two years from the end of the accounting period in which the development work took place.
If you are a first-time claimant, or if you have not made a valid claim in the previous three years, you must submit the Claim Notification Form (CNF) within six months after the end of the accounting period you are claiming for - this is required to inform HMRC of your intent to claim in advance, and is discussed in detail above.
To determine whether a company is eligible to claim R&D tax credits, a discovery call will take place with one of our commercial specialists. This will enable the viability of a claim to be assessed, determined by both the operational expenditure incurred by the business and projects they have undertaken in the previous two accounting periods. If eligible, RCK will match the client with a technical consultant from our team, who will engage the prospective client in a three-step claim process, typically taking three hours of a clients’ time:
1) Handover Call: cover company due diligence; outline HMRC’s definition of R&D; map out the R&D process in further detail; and discuss at a high level potentially qualifying projects.
2) Technical Scoping Call: in-depth discussion of qualifying R&D projects, informing the case studies and narrative used within our technical report submitted to HMRC.
3) Costing Call: Working out the percentage of R&D which can be associated to the operational expenditure incurred by the business, in turn determining total R&D tax credit benefit.
One of the biggest hurdles in claiming R&D tax relief credits is determining eligible projects. The guidance provided by HMRC states that R&D for tax purposes takes place when a project "seeks to achieve an advance in science or technology”, where the work done seeks this advance through “the resolution of scientific or technological uncertainty” that is not readily deducible to a competent professional within the field. This also includes activities related to the project in support of it, known as qualifying indirect activities.
In summary, this can be more readily understood as projects undertaken that look to achieve innovative solutions in a field where readily available or commonly adopted strategies and processes are not sufficient. These projects often require experimentation of new systems, technologies not usually utilised in a given field, or a fundamental redesign of a process to match the output of another technology.
The role of the technical consultant assigned to the claim process is to help the company identify areas in which they can claim. The claim process is broken down into a simpler set of questions for the client, allowing them to critically evaluate the work they have done and the results they have seen. This is supported by an analysis of the relevant state-of-the-art literature to contextualise the project. Our technical consultants strive to develop strong client relationships in order to deliver a detailed and accurate assessment of our client’s innovation.
R&D tax relief can be claimed on a range of expenses incurred by a company. These can be summarised in the following categories:
Staff Costs: The salaries, wages, employer national insurance contributions, and employer pension contributions for employers involved in R&D projects. Furthermore, travel expenses necessary for journeys related to R&D projects can be qualified.
Consumable Items: Costs relating to materials that are wasted, destroyed, or irreversibly converted during the R&D process. Notably, this includes prototypes scrapped during the R&D process, and electricity and water costs directly related to company operation on R&D projects.
Subcontracted R&D Work: Costs relating to R&D work outsourced to another company.
Externally Provided Workers: If a company engages with a third-party agency for direct work on R&D projects.
Software: Licenses for software necessary for the R&D work to take place.
During the costing call, our consultant will assess the R&D contribution of each cost incurred to determine the overall qualifying expenditure of the claim through discussion with the client to ensure that an accurate apportionment of costs relating to R&D is achieved. The consultant will then calculate the tax relief benefit for the company.
RCK will compile all analysis within a report, which will be used to claim R&D tax relief.
We will prepare the AIF for submission. The AIF, along with the report, is sent to the client for review and authorisation that the claim is representative of activities undertaken by the company. At this stage, the client will verify the claim for the final time ahead of submission to HMRC.
Once the forms have been validated by the client, it will then be submitted to HMRC.
We’ll arrange regular meetings between the R&D agent and the company’s Tax/Finance team, to keep all stakeholders informed on the status of the claim. We’ll also have check-ins throughout the year to provide record-keeping guidance in advance of the upcoming claim period.
When claiming R&D tax credits with RCK Partners, clients are matched to a specialist in-house technical consultant with a vocational and/or academic background within their industry. Using their relevant background and expertise, RCK’s consultants’ ability to accurately identify qualifying R&D projects and recognise the full scope of qualifying expenses ensures a clients R&D tax relief benefit is maximised.
Following the collection of technical and financial information from client, a technical report and Additional Information Form(AIF) is compiled by the consultant and reviewed by RCK’s industry leading compliance team. Staffed with chartered accountants, tax advisors and ex-HMRC inspectors, their scrupulous attention to detail guarantees a fully legitimate claim process as they ensure each R&D claim submitted complies with HMRC guidelines and legislation. Given the upward trend of enquiries into R&D tax relief claims in recent years, having a trusted provider which places such emphasis on compliance and security is of paramount importance.
In addition to our compliance function, RCK’s appointment of Lord Philip Hammond as a Senior Advisor to the business last summer has helped us to better understand and support our clients in an ever evolving and turbulent tax landscape. As former Foreign Secretary (2014-2016) and Chancellor of the Exchequer (2016-2019), Lord Hammond has advised the business on both macroeconomic factors within the marketplace and provided un-paralleled insight into the political philosophies which are fundamental in creating and shaping R&D tax credit legislation.
Conclusion:
Claiming R&D tax credits is not only crucial in supporting and incentivising companies to invest in research and development, but the wider UK economy as it strives to become a global leader in innovation. Given this importance, claiming with a specialist provider such as RCK Partners is imperative for companies which prioritize a best-in-class service and a fully secure, compliant R&D claim process.
Companies have two years from the end of the accounting period to submit a claim for qualifying expenditure incurred in that period. This is because R&D tax credits are claimed via a company’s Corporation Tax return - twelve months to submit the Corporate Tax return, and a further twelve months to edit it. In very rare circumstances, HMRC can allow an extension of the two-year limit, but usually only if claim submissions were delayed due to unforeseeable circumstances (like illness).
Put simply, the steps involved in submitting an R&D claim to HMRC involves:
Working with a specialist provider like RCK helps ensure your claim has the best chance of success.
The Additional Information Form (AIF) is a mandatory form in the R&D claim process. It provides HMRC with key information: company details
(e.g. UTR, VAT registration number, PAYE reference number etc.), project details (e.g. main field of science or technology, what the project planned to advance, uncertainties faced etc.), qualifying costs and claiming amount, connected companies, and contact details for any key personnel (e.g. R&D advisors, accountants, employee responsible for submission etc).
Capital allowances on cars allow UK businesses to claim tax relief on the cost of vehicles used for business purposes. This guide is written by RCK Partners to help UK businesses understand capital allowance claims on vehicles.
From April 2027, R&D tax credits will be excluded from QIP calculations, reducing the likelihood that companies are required to pay corporation tax early.
A practical guide to Research and Development Allowances (RDAs), including qualifying capital expenditure, laboratories, pilot plants, R&D facilities, interaction with R&D tax relief, and how businesses can maximise tax savings on innovation projects.
.jpg)
.jpg)