As an accountant advising clients on Research & Development (R&D) tax claims, it’s essential to ensure they have a competent professional involved in the process.
What do we mean by “competent professional”?
A competent professional is someone who has the right skills, experience, and qualifications in the relevant area of science or technology related to the claim.
The person will need to use their expertise to distinguish between technical challenges that qualify for R&D relief and routine activities that do not.
Simply having experience in a specific field or showing an interest in R&D is not enough.
How to identify a competent professional
As stated earlier, the ideal candidate will possess a thorough understanding of the project along with the scientific and technological principles.
However, they will also need to demonstrate their competency. Below are some examples of evidence that can help establish their qualifications:
- Industry awards they have received or for which they have been nominated.
- Public acknowledgement of their contributions, including coverage in news articles and scientific publications.
- An extensive career in the field, preferably with experience at a senior level.
- A track record that highlights successful outcomes in their industry and/or with R&D projects.
Recent compliance reviews have highlighted that HM Revenue & Customs (HMRC) is now more actively questioning the qualifications of professionals, challenging their competency more regularly.
An example – Who should be the competent professional?
Let’s take a look at a hypothetical example.
Imagine you are submitting an R&D tax claim for one of your clients who has been working on a software project set to revolutionise the marketing industry.
The Senior Developer has been the leader of the project since the beginning, has experience from several previous successful R&D projects and has won several industry awards.
Meanwhile, Dave, the IT Coordinator has been with the company for only a year and only has a general understanding of R&D and innovation.
Which one do you think should be named the competent professional on the project?
That’s right, in this scenario, the Senior Developer is the clear choice. Their deep knowledge of the project, industry recognition and proven track record make them well-qualified to fulfil the role.
Does the competent professional need to work for the company?
No. The competent professional can either be an employee of the company or an external expert.
The key is that they meet HMRC’s competency criteria.
Do you need to include the competent professional in the Additional Information Form?
Yes, the competent professional’s name should be included in the Additional Information Form (AIF). However, the form does not require a detailed biography.
That said, you should always be prepared to provide evidence of their qualifications and experience in case of an HMRC compliance check.
What should you do next?
When preparing or reviewing a client’s R&D tax claim, ensure that the competent professional is clearly identified and properly documented. This can significantly reduce the likelihood of an HMRC enquiry.
Too often, claims fail because they do not convincingly demonstrate the individual’s expertise in the R&D project.
If you need assistance helping your clients with their R&D tax claims, contact our expert R&D tax consultants.