When it comes to claiming R&D tax relief, having solid records can make all the difference. In our experience, too many businesses miss out or make mistakes in their claims because they haven’t documented their activities properly. With the recent introduction of prenotification requirements, it's more important than ever to have clear records from the start of any project you think might qualify.
Here's why keeping records is so crucial, and how it can simplify the claims process.
Under the new prenotification rules, businesses must notify HMRC they intend to make an R&D claim within 6 months of the period end. This means you can no longer wait two years and start hunting around for which projects might qualify. Instead, you’ll need to be clear about your R&D work right from the beginning.
We’ve seen clients who aren’t always sure exactly when their R&D activities took place. This lack of clarity can lead to missed opportunities in R&D claims, as projects are often overlooked, or timelines get skewed. Without precise records, you may not remember which uncertainties you faced in which year—and that can throw off the entire claim, including eligible expenditure and which costs apply.
Maintaining records in real-time helps tremendously. If you record what you’re doing as you go, you’re not relying on memory to fill in the gaps later. You’ve got a record of each meeting, experiment, or setback, making it easier to explain why each step was necessary. Plus, with real-time records, it’s much easier to break down costs and correctly identify eligible R&D expenditures.
We’ve noticed that when clients only start pulling information together after the event, it often leads to confusion. They’re unsure when certain activities took place or which specific tasks addressed the technological uncertainties, and it makes accurate costing difficult. This isn’t just a hassle—it can mean you end up with an incomplete or inaccurate claim that may not stand up to scrutiny.
One of the main criteria for a successful R&D claim is proving “technological uncertainty”—where you weren’t sure if something was technologically or scientifically feasible. Understanding when this uncertainty starts and ends is crucial, as it defines the eligible R&D for tax purposes.
In practice, though, we’ve seen that companies often aren’t clear on where R&D begins and ends, especially if it’s part of a larger commercial project. It’s easy to assume that all project work qualifies, but that’s not always the case. Once you’ve overcome the main technological uncertainties, the project often moves into a more commercial phase, which isn’t eligible. Without good records, it’s hard to show exactly when you transitioned out of the R&D phase and into routine development, making it harder to justify if your claim is enquired into.
For us, helping clients build this habit of real-time documentation isn’t just about compliance; it’s about helping you make the most of your R&D investment and your time.