Expert Advice: Ayming – How to make sure your claims process is robust
R&D Ask the Expert – How to make sure your claims process is robust
Claiming R&D tax credits involves identifying suitable projects, collecting and analysing technical information, and presenting it in the way the HMRC requires.
We speak with Constantine Costas, Senior Manager R&D Tax Incentives at Ayming UK, about how to best ensure that process is efficient and effective. Constantine is a qualified Accountant and has 6 years’ experience in R&D Tax incentives at Ayming.
How do you ensure the claims process is robust without wasting time and money on admin?
The central aim here should be to ensure that the projects chosen are representative of the nature of the core R&D work undertaken by the company, and of material value. There’s little point in choosing a small packaging development project if you are a large drug manufacturer and this project makes up 1% of your R&D spend
Where there’s a range of projects that may or may not qualify, and it’s not clear which should be pursued, it makes sense to outsource that analysis. But I’d be wary of the very ‘light touch’ reports out there in the market. Unless tax credits advice is underpinned by rigorous evaluation, the information provided will leave you, and more importantly HMRC, with more questions than answers.
For large companies, it is important to find the best approach that captures the key R&D projects without tying up staff in unproductive work. Sampling can be used to produce a representative claim without using up huge internal resources. And HMRC can be pre-engaged. They usually prefer to have advance notice of the process, so they can understand it and give their input, before it is applied. This saves time in the long run as well as making for more successful claims.
When should companies compile their technical information?
My preference is always as soon as possible after the company’s year-end. This is when the information is freshest in people’s minds. Of course, it’s not always practicable, and there can be a significant time lag. Because the scheme is retrospective, there’s a tendency to think that the timing is not critical. But from our experience, the sooner work starts, the easier it is to compile a comprehensive claim. We encourage clients, particularly bigger companies, to move towards capturing information in real time. This means that the data, especially the financials, are as accurate as they can be.
How do you ensure the process continues to produce the best results?
Staff following the same process year to year will tend to become stale and apply it mechanically, potentially missing fresh opportunities to claim. Also, the structures and activities of larger companies are constantly changing, and the claims process needs to reflect these changes.
So keep the process under review and keep asking questions about it, internally and of any advisor. Is it capturing all the business lines it should? Are all the relevant people being involved? Does the work produced represent the core business of the company and the nature of its R&D activity?
I’d recommend that companies go through a full review of their process every 2-3 years to make sure it’s as robust possible. Keep the claims process under constant review in light of evolving business strategy and best practice.
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