14Mar
In an era where prenotification, the additional information form, and other efforts to combat error and fraud are on the rise, businesses are facing heightened scrutiny.
For legitimate enterprises, the question arises – is the time invested in meticulous record-keeping truly worth it?
HMRC does not ask businesses to create unnecessary records or invest in expensive tracking systems. However, the adequacy of your records becomes paramount when considering a R&D inquiry when HMRC request contemporaneous project records.
Let's explore what that means and how your records play a pivotal role in the success of your R&D tax claim. Naturally, certain records, such as payroll details and technical drawings, are inherently maintained in real-time.
1. Identifying Qualifying Projects: Keeping records to pinpoint which projects qualify for R&D relief is not just a recommendation; it's a necessity. Without a clear trail of project documentation and the timeline, it becomes challenging to substantiate your claim's legitimacy during an inquiry.
2. Tracking Qualifying Costs: Documenting expenses related to individual R&D projects is the linchpin of a successful claim. Legitimate claims are built on precise and justified cost documentation. Without this, you risk delays and setbacks in the claims process.
The Pitfalls of Inadequate Records
Over the last six months, we've engaged with businesses facing challenges due to inadequate records. The inability to obtain crucial information has slowed progress in making claims or resolving HMRC inquiries. A lack of records makes it particularly difficult to identify project timelines and specific uncertainties, especially when key staff members are no longer available.
HMRC's Compliance Check Wishlist
During a HMRC compliance check, you may be asked to provide a range of evidence, including project documents, physical prototypes, and meeting minutes. These elements are vital to proving the authenticity of your R&D activities.
Streamlining the Process with Empirical Tax
At Empirical Tax, we collaborate with our clients to streamline this process, ensuring you are well-prepared not only for your current claim but also for any subsequent scrutiny that may arise.
Partner with us to turn meticulous record-keeping into a seamless and strategic advantage.
Comments