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We have been watching with great fascination how the Government has been handling R&D investment and, as R&D tax consultants, we are excited to see businesses making the most of it.
Accountants are well placed to help clients with R&D and we provide R&D help for accountants, ensuring that innovation is well supported.
Through this, we can expect to see more businesses embarking on ambitious R&D work.
Where multiple R&D projects are done simultaneously, it is important to know how to handle them so their value is not lost.
Can multiple projects be included in an R&D tax relief claim?
Provided that a project meets the criteria for R&D as defined by HMRC, it can be included in an R&D tax relief claim.
Technically, there is no upper limit on the number of projects that can be included in a single claim, though there is a question of how many can realistically be managed.
As R&D tax relief claims get their value from recovering funds based on qualifying expenditure, it is only really worth discussing projects that have some notable costs behind them.
It may be that some smaller projects are not worth considering if the expenditure is so low as not to make an impact on the overall R&D tax relief claim.
However, smaller projects can be included in a supplementary fashion, provided the correct number of projects are given the proper attention.
How do you determine which projects are worth including in an R&D tax relief claim?
Depending on how many projects an innovative business has conducted in the accounting period, the number to focus on also changes.
Three is the magic number with R&D tax relief claims, as this is where things begin to get complicated.
If three or fewer projects have been done, then all of them will need to be detailed in an R&D tax relief claim.
Where ten or fewer projects have been conducted, it is necessary to focus on at least three of them.
More might need to be focused on, as 50 per cent of the total qualifying R&D costs need to be detailed in the R&D tax relief claim.
If a business is really pushing the boat out and has done more than ten projects, then you can expect a hefty R&D tax relief claim as a result.
The ten largest projects will need to be covered and they must represent at least 50 per cent of the claim.
Even if 50 per cent of the claim is reached in one or two projects, it will still be necessary to include the full ten if the innovative business has done such an immense amount of R&D.
The priority should always be on the projects that have the highest qualifying costs associated with them and represent the most significant advances.
Information needs to be gathered and retained on all projects included in an R&D tax relief claim, even if they are not the main focus.
Should the claim be subject to an enquiry, HMRC may want to investigate the smaller projects, so do not think that they are off the hook because they were not part of the initial focus.
There is a concern that ineligible projects could be Trojan-horsed through legitimate projects, so even smaller projects must be checked for validity before being included.
Knowing which projects are eligible and which are worth focusing on is where our speciality shines.
We can support you and innovative businesses in ensuring that the full scope of R&D is represented in an R&D tax relief claim.
As an accountant, you may be well-positioned to identify the costs associated with each project and can give clients a starting sense of what to focus on.
With R&D tax relief claims this big and complex, it is always worth getting expert support, as losing out on a claim like this would be tragic.
To help even the most innovative clients thrive with R&D, speak to our team today!
Adam Bointon is a Technical Director specialising in R&D Tax Credits for SMEs in manufacturing and software sectors. With over 15 years’ experience, he works closely with businesses to identify qualifying R&D activities and prepare clear, compliant claims. He combines technical expertise with a strong understanding of economics and finance to support successful outcomes. Adam also contributes to industry webinars and CPD sessions, sharing insights on R&D tax relief and HMRC requirements.
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