HMRC R&D eligibility checker

HMRC has launched an online checker to help businesses judge whether their projects meet the definition of research and development before they file a claim. The tool has been designed to reduce errors for incorrect claims. However, this is not mandatory and the results of this test is not binding. Instead, it gives a bit of insight as to whether the company may wish to pursue a R&D claim.

A qualifying R&D claim can reduce a company’s corporation tax bill for the period and if the company is loss making it can also lead to a tax credit being awarded.

The new HMRC R&D tool works like the CEST tool that is used to asses employment status for IR35 purposes. In short, a series of questions are addressed and after this a result is received indicating whether the project contains qualifying R&D. The process takes approximately 10 minutes.

The checker is aimed at first-time claimants and companies with limited experience. However, HMRC expects a ‘competent professional’ to supply or validate several answers. This means someone qualified or experienced in the relevant science or technology, usually involved in the project and aware of baseline knowledge at the start. In order to access this tool, please use this link: https://www.gov.uk/guidance/check-if-a-project-includes-activities-that-qualify-as-research-and-development-for-tax-purposes

You can preview, save, and print the results. The tool does not assess costs or scheme choice, so check HMRC guidance on eligible expenditure separately.

In addition to the above it is advised that professional advice is sought to ensure that as a company you are aware of the full R&D criteria and the potential benefit this may bring to your company. This is a complex area of corporation tax where the effective rate of relief and the rules surrounding these claims has changed significantly in recent years.

If you have any questions regarding the above or R&D relief in general, please feel free to get in touch and ask for Joe Wilson or Alan Rolfe in the tax department.