When compiling an R&D tax relief claim, there is a risk that innovative businesses and accountants may overlook the role of the competent professional.
While the technical narrative and the assigning of costs are all vital parts of the process, the competent professional is vital for ensuring that the R&D tax relief claim is accepted by HM Revenue and Customs (HMRC).
There are some key things to note about who can be considered a competent professional, so it is imperative that businesses and accountants understand the criteria.
What makes a good competent professional?
A lot of the validity of an R&D tax relief claim centres around whether the work conducted can be considered an advance in a field of science and technology.
For this to be true, it is necessary to establish that the advance could not be readily deduced by a competent professional.
What proves someone is a competent professional is not exclusively confined to a university degree or a formal certificate although these certainly help prove competency.
A demonstrable track record of innovation can be similarly impactful.
This can be evidenced to HMRC through documented involvement in similar technical challenges, patents or technical reports, contemporaneous test records or prototypes and clear technical explanations of why certain approaches were tried and why they failed or succeeded.
There are many trades where long-term, hands-on experience is the strongest evidence of competence as it proves more knowledge than can be taught academically.
HMRC may naturally note formal qualifications, but they will often accept sustained practical experience and a clear record of relevant innovation as sufficient to establish a competent professional’s standing.
Keeping up to date with the current state of a field helps the competent professional demonstrate they could reasonably judge what was and wasn’t obvious at the time.
This may be done through showing recent work and training or through attending conferences or other peer networks.
How involved do competent professionals need to be in R&D?
A competent professional has to be involved in the project in some capacity, but there is no obligation for them to be exclusively involved in the R&D.
Other people can contribute to the project even if they are not considered competent professionals.
However, any challenges faced during the course of the project need to be verified by the competent professional as being an actual uncertainty and not just the result of a lack of knowledge or experience.
Innovative businesses should try to include the competent professional in discussions concerning R&D tax relief claims.
This will make the claim easy to compile as the accuracy of the data can be ensured from the outset.
Similarly, it is important to keep in mind that not all of the work done by a competent professional will count as R&D.
Their routine tasks need to be discounted when assigning how much time they worked on the project, even if those routine tasks were tangentially connected to the project.
Only work conducted to resolve the uncertainty and achieve an advance can be considered valid for an R&D tax relief claim.
The competent professional does not have to be the person who relays information about the R&D work to an accountant or R&D tax consultant.
If they are not involved in the R&D tax relief claim directly, they should provide enough information and notes to allow other people to discern what the advance was and the uncertainty faced during the process.
If the competent professional can convey this when compiling the R&D tax relief claim, it should make describing the project to HMRC easier.
We can help you understand what makes a good competent professional and how they can improve their validity in regard to HMRC’s standards.
The competency of the professional is often called into question during enquiries, so it is vital that they continue to develop their knowledge and stay up to date with the latest advances in the field.
