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Crafting a technical narrative for R&D tax claims

Author: Tom Mason

If an R&D tax claim is a puzzle, the technical narrative is that vast chunk of blue sky that takes up half of the board – integral, but something of an enigma.

The introduction of the Additional Informtion Form (AIF) now means that your clients are required to submit a technical narrative with each R&D tax claim, describing qualifying activities – and you need to know how to craft one.

We understand that this can be a challenge without the right expertise in-house, particularly as the technical narrative has only been a compulsory element of R&D tax claims for a short time.

However, it’s important that you and your clients understand what goes into a technical narrative and why it needs to form a central part of your clients’ R&D tax claims.

The role of the technical narrative

Until recently, a technical narrative was not compulsory for R&D tax claims, and they were frequently omitted for smaller claims – but this misses one of the key points of its inclusion in a claim submission.

The purpose behind it is to demonstrate how your client’s work meets the definition of R&D and the requirements of the scheme, making it an integral part of even the smallest submission.

Its role is to show HM Revenue & Customs (HMRC) that your client has genuine faith in their claim and the project it relates to, as an example of R&D and as an innovation in their field.

Additionally, it serves a purpose for HMRC and your clients should remember that when working with you and with us to prepare it.

HMRC will use the technical narrative to determine whether your claim complies with regulations and meet the relevant definitions, so it must include certain required details.

A successful technical narrative

The first aspect of a successful technical narrative is whether it meets the basic requirements of the AIF.

This means that your client’s submission must include details of how their project:

  • Seeks a technical or scientific development in their field
  • Overcomes or attempts to overcome an uncertainty

It must also include details on:

  • The costs and resources involved
  • Targets and outcomes
  • The challenges your client faced

This is the ‘technical’ element, but the ‘narrative’ element is just as important.

Whoever assesses your client’s claim is unlikely to have the same level of technical expertise as your client, which means their project needs to be detailed in accessible, straightforward language which demonstrates innovation and a genuine desire to develop a technical or scientific field.

Developing a technical narrative can be time-consuming but, aside from being compulsory, it is a vital part of your client’s submission, providing an opportunity to demonstrate compliance and innovation which makes a contribution worthy of claiming tax relief.

We can advise you and your clients on preparing a technical narrative which meets HMRC’s requirements and stands up to scrutiny.

Contact a member of team to find out more about how we can help you.