Sage LakhaniHead of Consulting

Having started her career with PwC London, Sage has previously held positions at two boutique tax consultancies working with entrepreneurs and growing businesses. She is also a qualified Chartered Tax Adviser.

At the time of writing (January 2023), there is no set record-keeping template or protocol for making an R&D claim. The shape and nature of suitable records for R&D is likely to vary between businesses.

HMRC are aware that first-time claimants will not always have comprehensive contemporaneous evidence for each aspect of their R&D. But any company claiming R&D tax credits inherits an evidential burden and a need to satisfy HMRC’s criteria for accurately underpinning the qualifying R&D and its expenditure (so you should expect to provide some documentary evidence in support of your assessments).

What do first-time claimants need to present?

In the first instance, you would be expected to demonstrate that prudent assessments have been made – this means you can still make a claim if you have no R&D-specific timesheets. HMRC will expect your record-keeping for R&D to improve year on year.

Contemporaneous records of project milestones, the people involved (and their time), and the eligible activities are all helpful in supporting an R&D claim. Timesheet systems can also be helpful in quantifying employees’ time on projects and activities (provided they know how to classify qualifying and non-qualifying work); but timesheets are not always the most suitable or practical system for a business. What matters most is that the system you use for tracking your R&D activities is suitably contemporaneous so that it reconciles with any costs, and – most importantly – it works for your business.

Using an R&D adviser

If you’re a new claimant, an expert adviser should take the time to get to know your business; they can help identify and clarify all the likely areas of R&D. And this targeted approach will help you devise or implement the most appropriate record-keeping measures for tracking R&D in your business.