Having the right R&D records when you’re making a claim to the HMRC is vital, but you can still make a claim if you don’t have the documentation you need. In this article, discover how to claim R&D tax credits when you don’t have any records.
Why are R&D records so important?
Since R&D tax credits are claimed as a part of your tax return, it’s important you have the records and documentation to support your claim.
The HMRC expect to see some form of records when you make an R&D claim. Having the right R&D records means you’re more likely to receive the maximum benefit from your claim, and not having them means things could be missed, which will affect the amount of credit you receive.
What R&D records do you need?
HMRC doesn’t provide any specific requirements as to what exact documentation you need for your R&D claim. But the Corporate Intangibles Research and Development (CIRD) manual shows how HMRC approaches R&D claims, so this could be used for guidance.
For an R&D claim, you must highlight your qualifying R&D projects and activities, as well as any costs involved. Examples of the costs you can claim against include:
- Materials
- Consumables
- Internal and external staff time
- Contractors
- Software licences
What happens when you don’t have R&D records?
You can still claim tax credits if you don’t have any R&D records. Chances are that your R&D projects left a lasting impact on your business, so you should be able to find the information you need to make a claim.
Go through and identify any qualifying R&D projects within the claim period, then work out the costs associated with these projects (you can use the cost categories above as a guide). Crucially, you need to make sure your costs are attributed to your R&D work, so you can clearly show the HMRC what costs were associated with your R&D activities.
How to record research and development costs?
Although you can piece R&D records together, you should make sure you keep real-time records. Not only does this make it easier when you’re preparing your R&D claim, but it also strengthens your claim and ensures that nothing is missed and you receive the maximum benefit.
If it applies to your company, a timesheet system is the HMRC’s preferred structure – but if this doesn’t suit your business, regularly reviewing your R&D projects and recording notes on the work and costs involved will suffice.
How Ayming can help
With over 30 years’ experience, Ayming is Europe’s largest tax incentives advisor, helping our UK clients receive over £600 million in their R&D claims.
Our experts can help you understand how to record for R&D tax credits, ensuring you have everything you need to get the most out of your claim. Speak to our experts to find out how we can help you with your R&D tax credits.