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Best practice in preparing R&D tax relief claims

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Making sure our clients have the tools and knowledge to prepare robust and defensible R&D tax relief claims is very important to us here at WhisperClaims. We’ve written various times about, for example, how to avoid enquiries or how to write a technical narrative, but we thought it was about time we brought all of this together into a guide to best practice!

In our experience, the key things that make a good claim preparation process are openness, co-operation, consistency and knowledge. If you make sure that you’re bearing these in mind every step of the way, you won’t go far wrong.

Step 1: Knowledge

The first step when preparing any R&D claim is to make sure that you understand HMRC’s guidance and criteria for what constitutes eligibility. We’ve written before about eligible expenditure, tax credit rates and the basics of eligibility, and of course we have our training courses and webinars, but it’s important that anyone offering advice on R&D tax relief has spent some time at the single source of truth, also known as the Corporate Intangibles Research and Development manual (CIRD). 

Once you’ve made sure that you have a robust understanding of HMRC’s guidance, it’s key to then pass on this knowledge to your clients. We’re written about this before, but in short you do need to make sure your client has at least a passing understanding of the relevant parts of the guidance. In the end they’re the ones who have the detailed knowledge of their projects, and are best placed to assess whether they are eligible, with your guidance.

Step 2: Co-operation

Once you’ve made sure that you and your client have enough knowledge to prepare a robust claim, it’s time to start thinking about how best to work with your client through the process. It’s vitally important to make sure that preparing an R&D claim is something you do with your client, rather than for your client. Preparing a claim without your client’s input is risky and misguided at best, and potentially fraudulent at worst! Additionally, defending an R&D claim in the case of an enquiry is incredibly difficult unless your client has been involved from the start! 

Step 3: Consistency

Every robust and well-prepared R&D tax relief claim starts with a consistent process. There’s no right or wrong way to do this as long as you make sure you’re covering all of the bases, but our experience suggest that this might be a good order of operations:

  1. Develop a question list, report template and cost breakdown structure to ensure that your output is the same each time;
  2. Have a structured conversation with your client about the projects they carried out during the claim period;
  3. Assess each of these against the criteria and decide which to include in the claim;
  4. Work with your client to identify the costs of each of these projects;
  5. Prepare a technical narrative, making sure to demonstrate that your client’s work is eligible without giving HMRC more information than they need;
  6. Prepare a breakdown of the eligible costs;
  7. Have your client review the narrative and the costs and get their sign-off;
  8. Submit the claim to HMRC. 

Step 4: Openness

Having learned all you can about R&D tax relief, worked out how to work with your clients and implemented a consistent process, all that’s left to do is make sure that you do all of this with openness and integrity! It’s vital that you keep your client informed about each stage of the process, and the pros and cons of claiming. In fact, telling a client that they are not eligible to claim and backing this up with your knowledge of the scheme, can be as valuable for your relationship with the client as making a claim.

In the end, the claim, alongside all other tax-related decisions, belongs to the client. They need you to be above board with them about all aspects of the claim so that they can be confident that they are filing correctly and are not being exposed to unnecessary risks. Remember, exposing your client to an enquiry about a claim that shouldn’t have been submitted in the first place, or that has been badly prepared, is one of the quickest ways to lose their business, and damage your own reputation to boot!


We’re covering this topic in our upcoming webinar ‘Best practice in preparing an R&D tax relief claim’ on the 26th of April, 2022 at 12:30. Tickets are free, so book while you can!

Book your ticket on Eventbrite

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