Fergus WatsonR&D Senior Financial Consultant

Having started out at one of the Big Four accountancy practices for several years, Fergus has extensive experience with R&D tax claims.

Each time you make an R&D claim, your employees’ time should be allocated as closely and accurately as it reasonably can be. Contemporaneous record-keeping can help support your staff-time allocations; but your allocations should always reflect the time each staff-member has spent on qualifying activities.

Only those staff-members and directors whose time is spent on qualifying R&D – in whatever quantity can be accurately apportioned – can be included in your claim.

What staff costs can I claim against?

There are two types of qualifying staff cost categories in an R&D claim: qualifying direct activities, and qualifying indirect activities (sometimes referred to as ‘QIAs’). Qualifying direct activities are those which the legislation describes as directly contributing to the resolution of scientific or technological uncertainty. Qualifying indirect activities (QIAs) are more varied; an expert adviser will be able to help you ensure a proper distinction is made, no-one’s eligible time is missed or inaccurately attributed.

Should the allocated time be the same for each employee?

The correct apportionment for each employee will derive from their individual role, remit, and responsibility in your R&D project(s) – the time spent on qualifying activity will differ from person to person. Apportionments for the same person, or persons, across different claim-periods are therefore likely to vary too – HMRC expect companies to proactively review their records and apportionments each time they make a claim.

What do HMRC look for?

At present, there are no set or standardized record-keeping requirements for a company making an R&D claim – and HMRC understand that some first-time claimants may have less detailed contemporaneous records for R&D at the first juncture. But as a form of self-assessment, you should expect to support your assessments and apportionments with as much detail and accuracy as is reasonably possible.