Specialist R&D Tax & Grant Funding Advisors

R&D Tax Credits: How to prepare a technical report

Not heard of the R&D Tax Credits scheme yet? Your company could easily be missing out on many thousands of pounds. But it all hinges on the technical report!

Barrie Dowsett

Chief Executive Officer

31/10/2022

10 minute read


Not heard of the R&D Tax Credits scheme yet? Your company could easily be missing out on many thousands of pounds of much-needed tax relief.

Offered by the UK government since the year 2000, R&D Tax Credits are designed to encourage businesses to innovate by covering a large proportion of the costs. In fact, up to 33p of every £1 spent can be claimed back from HMRC, either as a reduction in Corporation Tax or as a cash credit.

This is great – but unfortunately making a claim can be hard work to say the least. It’s essentially made up of two parts: accounting for costs, and creating a high quality R&D technical report.

The first part is about showing HMRC exactly what you have spent on R&D projects, and - critically - how it meets HMRC’s exact criteria. This is the ‘accountancy’ part, concerned only with figures and data.

The second part of the challenge (and often the most difficult bit) is the R&D technical report. This where you’re demonstrating to HMRC that the work your company has completed can be classed definitively as R&D. HMRC inspectors deal with a huge number of highly technical applications all the time, so they need to be able to understand the technology used in your industry quickly and easily. The language used in your technical report therefore needs to have just the right level of detail without waffle, and should be written in a way that’s easy to understand.

If both of these parts of the challenge seem daunting, don’t worry - that’s what the experts at Myriad Associates are here for. Our team is made up of accountants and specialist R&D advisors who have been working with businesses on all aspects of R&D tax relief for well over a decade. We will put together your costings and your technical report on your behalf so that it meets HMRC’s strict technological and scientific criteria.

What should a good R&D technical report include?

The technical report essentially should describe why the project was undertaken, the scientific or technological problem it looked to solve, and how it meets HMRC’s legislation. It also helps HMRC check whether the claim has been made using the correct scheme i.e RDEC or SME (What’s the difference?)

To summarise, a competent technical report will contain:

  • Information about what scientific or technological advancement was made (or was attempted, if the project ultimately failed)
  • Details about the specific work undergone to address these scientific or technological uncertainties
  • Information about staffing (including internal, contracted and outsourced staff) in terms of what roles they played in the project and their competency levels
  • Details about how the scientific/technological challenges the R&D project addressed could not be easily solved by a professional in the field. This will involve providing the qualifications and work experience of such professionals, to prove to HMRC that this is the case.

How Myriad Associates will work through the technical report process with you

When you discuss your R&D tax relief claim with us, we’ll go through the specific project work your company has undertaken, alongside the financial aspects. We will get to know your company, your sector and your R&D work in as much depth as possible, to identify only the most highly relevant parts required for your claim.

Once this initial meeting is complete, we will draw up a draft R&D technical report, asking for clarification and feedback where necessary along the way. We’ll work hard to get the context and detailing right, making sure only a minimal amount of your time is required. Nothing is ever submitted without confirmation that you’re totally satisfied with it, and we put every effort into getting your technical report absolutely right first time.

Once you have approved the report, it will form part of your R&D tax relief claim. We will offer a wealth of expertise along the way, but (and this is important!) - you will have the final say on everything.

Why is it so essential to get the R&D technical report right?

The technical report shows HMRC that the R&D work your company has undergone meets the criteria set out in the BIS Guidelines. It’s a chance for you to fully explain the work, as well as to justify why you think your claim should be approved. Essentially an inaccurate or poor quality R&D technical report can lead to your company’s R&D tax relief application failing - and therefore you could miss out on thousands of pounds.

Additionally, if the technical report contains any inconsistencies, it may be a red flag to HMRC who will then likely pose further questions. They may even wish to carry out a more forensic look at your company’s tax affairs in general - expensive, stressful and best avoided.

Even once you’ve been awarded the relief, you may still not be in the clear

As with anything tax-related, HMRC is within its rights to re-assess returns for up to seven years following the year in which a claim is made. Indeed, it’s not uncommon for HMRC to look back at older claims, particularly if it believes there may be inconsistencies either with the claim itself or with something related to it. It may even wish to simply carry out random spot checks with very little notice. Imagine the stress of having to pull together a significant amount of R&D data from a project you carried out back in 2013 for example! Staff may well have left the organisation since then, and those remaining may not have the necessary knowledge or time required to tackle the issue. This is again why it’s so important to work with R&D tax professionals such as ourselves so you know you have a highly accurate, up-to-date and thorough technical report on file if you need it.

Get in touch with us

If you’ve got any questions about the R&D Tax Credits scheme, Creative Tax Relief or R&D grants then please do get in touch with our team. You can either call us on 0207 118 6045 or send us a message and we'll get back to you.


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