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The technical report sits at the heart of your R&D Tax Credits application - make sure you’re clear about how it’s done.
The technical report should be at the heart of your R&D Tax Credits application. It should essentially describe your R&D project in detail, clarifying the technological or scientific uncertainty it looked to resolve, and how it meets HMRC’s strict criteria. It also helps HMRC make sure the claim has been made under the right scheme, so the SME scheme or RDEC (What’s the difference?)
Once relevant projects and eligible costs have been identified writing can begin (at this point we strongly recommend taking a look at our recent blog: How To Prepare A Technical Report For An R&D Tax Credits Claim)
SMEs particularly should first have a thorough read through our R&D Tax Credits page as well as the Gov website. It gives a more detailed overview about the scheme, how to qualify and where the pitfalls lie. Then when you’re ready to start, contact the team at Myriad Associates so we can guide you. It’s a complex process, and frankly it’s not one you’ll want to undertake on your own.
If you’re claiming tax relief on one to three projects, then you must include a technical report for each one of them.
If four or more R&D projects have taken place, it’s slightly different. In this case, you must include detailed descriptions on at least three (to a maximum of ten) projects, which between them cover at least 50% of your total eligible R&D costs.
If you need to tell HMRC about more than ten R&D projects (covering over 50% of your eligible costs) you must send an email to: RD.IncentivesReliefs@hmrc.gov.uk.
You can use the online service to send HMRC details to support your application. However, there are several reasons why we recommend you don’t use this route alone. Mainly, it’s totally unsupported, in terms of helping you identify all eligible costs and activities that qualify, meaning you could be significantly under claiming. Also, if anything is picked up in your report by HMRC, and officers come back with questions, you’ll be on your own in answering them, which can be daunting. By working with a specialist to help prepare your claim, you’ll ensure your claim is maximised and get the full support from our experts every step of the way.
Again, for a more detailed look at writing a high quality technical report, read through our recent blog on the subject. But there are four points here we can’t highlight strongly enough.
HMRC received thousands of R&D tax credit applications every year, and officers must read through them all. So keep your narrative concise and to the point.
A good length for a technical report is around 2-5 pages of A4, which would cover perhaps one to three technical projects. Focus on the major elements of your technical narrative, such as the major features and the scientific/technological challenges.
Applicable research for R&D tax purposes is defined by HMRC’s guidelines (HMRC CIRD81900). Make sure you read through these guidelines before you put pen to paper (our specialists will also clarify this for you).
Many companies use phrases like “we had to research this because we’ve never done it before”. This leaves you vulnerable to HMRC asking whether your company was operating outside its area of its specialism. Just because your company itself doesn’t have the experience, knowledge or resources to complete a task, it doesn’t mean the industry as a whole would be challenged in the same way.
Not knowing how to do something, and carrying out R&D work to find the answer, is a good thing in this context. But what we’re saying is you must explain that you were operating within your sector of specialism, but that the R&D challenge could not be easily solved by a professional in your field.
The whole point of the technical narrative is to make the complexity of your project explicit to HMRC. This means it needs to focus on the technical challenges that were overcome, with much less emphasis put on the processes themselves. HMRC want to see how hard you worked to tussle out a solution for your project. It was tricky, it was complex - so tell HMRC that! After all, the more difficult a technical project it was, the more likely it will attract the R&D Tax Credits award.
Unfortunately, R&D Tax Credits will not automatically be awarded just because your project is bespoke to your company. Yes the work has never been carried out before so it’s therefore bespoke to you, but the processes you’ve used may not be (and you may not know this). This means that the processes you’ve used did not in fact carry any technical risk.
The bottom line is, if you’re looking to use words like bespoke in your technical narrative, then you must be able to explain which parts of the project actually advanced technical or scientific knowledge. Simply being unique will not be enough on its own.
Myriad Associates is a team of highly experienced technical specialists and costing & tax advisors all ready to help your company claim the R&D tax relief it deserves. High quality and outstanding value, our services are designed around you as demonstrated by our 100% success rate. Just check out our 5 star reviews on Google.
It’s so important to make your technical report the very best it can be. Don’t risk wasted time, stress and potential hefty fines by trying to go it alone. Call our team on 0207 118 6045 or use our contact form to talk about anything we’ve discussed here, or to get the ball rolling on your claim.