Blog: What qualifies as Research and Development and how to avoid common mistakes.
What qualifies as Research and Development?
On October 31st 2023, HMRC released new guidance to help R&D tax credit claimants identify if their work qualifies as research and development for tax purposes. These new guidelines are for companies that can claim additional deductions and credits for research and development expenditure.
HMRC has broken the guidelines down into six sections.
- Purpose, scope and background (part 1)
- Expectations of claimants (part 2)
- Importance of a competent professional (part 3)
- How to identify qualifying R&D activities (part 4)
- Recommended approach to claims and record keeping (part 5)
- Further information (part 6)
These new Guidelines for Compliance (GfC) are examples to help R&D Tac Credit claimants understand the general principles that apply to all R&D tax credit claims but are not the law. The current guidelines remain the law and should always be followed.
How can I avoid common mistakes with my R&D claim?
The latest guidelines from HMRC aim to help you avoid common mistakes in R&D claims by aiding you to:
- understand HMRC expectations of claimants
- identify who is a competent professional, able to judge if a project is seeking an advance in science or technology for the purposes of an R&D claim
- find out if your work qualifies as R&D for tax purposes
- understand the meaning of ‘scientific or technological advance’ for the purposes of R&D claims
- identify the scientific or technological uncertainty that the project is seeking to resolve
- decide where the project begins and ends for the purposes of an R&D claim
- understand the evidence of a qualifying project HMRC may expect to see if we check your claim
The latest guidance is there to help you make a correct claim and avoid the penalty HMRC charges if carelessness leads to an inaccurately high claim. It is your responsibility to make sure that your claim is correct, even if you use a tax advisor.
Expert guidance and support
If you have any concerns about the updated guidance and want to speak to someone about your R&D projects, we’re here to help. Please get in contact with us using the form below to request a callback, or call us on 0808 302 8493.