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Over the course of time, as we work closely with innovative businesses, we tend to get to know some of the individuals who drive the innovation.
When it comes time to prepare for R&D tax relief claims, we typically talk to the competent professional who had a significant role in the project to determine the intricacies of the work.
Should that person leave midway through a project, you may be left wondering how your next R&D tax relief claim will work.
Can R&D continue when key people leave?
While it may cause some amount of disruption to the R&D process, the departure of a key figure in the project does not necessarily have to bring the entire project to an end.
The manner in which the person leaves the project and the company will ultimately determine how problematic it is.
If the person leaving has time to prepare, they can be encouraged to make extensive notes about the project so far as well as the plans that were in place for the future.
It should be possible to use these notes to identify the historic examples of trial and error that progressed the research to the point where someone else is able to take over.
However, if the departure is more abrupt, there is a chance that key information and insights will be taken out of circulation.
This is why we encourage better record-keeping as we work with innovative businesses, as this can safeguard both the research and the R&D tax relief claim from the effects of an individual leaving.
Where it is no longer possible to evidence some of the work that has been conducted, it may be necessary to exclude it and any associated costs to prevent issues when compiling the R&D tax relief claim.
Do HMRC need to know when a competent professional leaves a project?
A change in ownership for a project will need to be acknowledged in some capacity within the R&D tax relief claim, but not necessarily explicitly documented.
Whoever fills the place of the person who left must also be a competent professional in their own right, or there needs to be additional competent professionals working on the project.
The R&D will need to stop if the person leaving is the only competent professional and they are not replaced by someone of similar or greater knowledge and experience.
This is because the insights of a competent professional are vital for making an R&D project valid under the guidance of HMRC.
We will reflect the qualifications and experience of any competent professional involved in each project and the time they spend working on the R&D will be captured in the costs connected to their employment.
This is the only capacity in which the exchange needs to be detailed in the R&D tax relief claim.
We are happy to work with any competent professionals in your business, although we may be sad to see someone good who we have come to know quite well.
As we continue to work with your business, we can enhance your record-keeping procedures to ensure that sudden staff changes do not jeopardise your R&D tax relief claims.
An effective way of mitigating risks to your R&D tax relief claim is to work with us to prepare the technical side of a claim as early as possible after the relevant accounting period ends.
Being proactive allows you to file the claim with the original accounts and tax computations, rather than filing an original then amending for the R&D claim at a later date.
This is HMRC’s preferred way of filing and doing this also exempts you from needing to submit an Advanced Notification Form for three years.
We have observed that an effective approach serves to send a strong signal to HMRC that a company has “got their house in order” when it comes to R&D, strengthening the perception of the well-organised business.
No matter what changes in staff your business experiences, we will ensure that only valid R&D tax relief claims are submitted to HMRC.
Speak to our team for dependable assistance with your R&D tax relief claims.
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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