It’s all about the story you tell. This is pertinent in so many areas of our life and business (especially sales), and also when applying for R&D tax credits.
The supporting narrative really is the story of your R&D tale, and it is very important to get your story right, with all of the box-ticking elements, in order to bring HMRC with you through the rest of your R&D tax credit application.
HMRC has introduced a new template covering this supporting narrative and data that should be submitted with R&D tax credit claims. This narrative can be the difference between having the claim accepted without question or embarking on a protracted investigation.
Luckily this template mirrors the process we use at mca group for R&D tax claims, which is probably why we have such a high percentage of first-time accepted claims.All our claims
All our claims are drafted by Dr Andrew Jupp, a senior tax consultant and former PhD Research Scientist. He understands the science and can ask the right, probing questions. He then writes the R&D narrative up in a way that demonstrates the scientific or technological advance, but in a way that is accessible to the average reader. Our claims, which mirror what HMRC now says it wants to see, include the following:
- Background to the company and an overview of the legislation and why the company qualifies
- Why is there a problem that needs solving? Explanation of advances in knowledge or capability in science or technology sought
- What are the scientific or technological uncertainties
- Description of how the company set out to solve the uncertainties and make an advance
- Dates when each project started and (if applicable) finished
- Qualifying costs for each project, split between people and consummables, indicating the proportion of time spent on R&D and a justification for this
- Brief biographies of R&D key team
The cost of getting it wrong simply isn’t worth the risk.
Many people have been used to simply submitting a “one line claim” as part of the corporation tax computation. This really isn’t sufficient. The above is the minimum that needs to be included to prevent penalties for getting it wrong, and HMRC can go back six years in investigating previously submitted claims.
You need to ensure that you have complete and accurate records, supported by a detailed report prepared by someone who understands both the technology and the numbers.