Will key personnel leaving a company ruin an R&D tax relief claim?

It is natural for people to want to change jobs as their career progresses, either because they want a new challenge or are hoping to take on a different role.

For innovative businesses, the loss of key personnel can alter the way that R&D is conducted and may have a notable impact on their R&D tax relief claim.

To help clients with R&D, it is important to understand the effect that departing staff can have on an R&D tax relief claim.

Does R&D stop when someone leaves a company?

Depending on how an innovative business is structured, the departure of one or more members of staff will have a varying level of impact on the work being done.

Smaller businesses are likely to suffer more from staffing changes, though large companies are not immune to the effect of a star player leaving the team.

The risk is that too many of the ideas for the R&D project rest solely with one person, making their loss devastating for the work that has been done.

Ideally, a number of competent professionals will be engaging with an R&D project and may even have a team in place to support their efforts.

This collaborative approach can make an advance more achievable as they can bounce ideas off each other and inspire greater work across the business.

Relying on a limited number of brilliant minds, or putting all eggs in one basket, is a gamble that will ultimately spoil R&D efforts.

Even if a competent professional relishes the work they do, there may be other factors that cause them to leave the business, so R&D work cannot be dependent on an individual.

Poor record keeping is also exposed when someone leaves a business, as if most of the work done or the ideas contemplated never left their head, then it will be difficult to carry on the work or represent it in an R&D tax relief claim.

How do staff changes impact R&D tax relief claims?

The work done by the employee before they depart should still be able to be captured in an R&D tax relief claim.

Before they go, every effort should be made to determine what they achieved, what they were working on, the logic behind their approach and any ongoing uncertainties that were being tackled.

These should be maintained contemporaneously to avoid an emergency situation where important information about the advance being sought is lost.

In terms of accounting for the departure in the R&D tax relief claim, the process is relatively simple.

HR and payroll will have the exact dates when the person worked and left the company, so staffing costs can be accurately represented.

Needless to say, only the time they were at the business can be included for their staffing costs.

This means that even if the project is based on someone’s idea, if they left the company before work actually began on it then no salary costs can be included.

It can be difficult for innovative businesses to lose key members of the R&D team, but this does not need to be a barrier to an R&D tax relief claim.

Our team of experts are on hand to improve the way that R&D is tracked and managed in R&D tax relief claims.

The role we play as R&D tax consultants has taken a greater focus on risk management and prevention recently and stronger record keeping is an excellent place to start.

For accountants wanting to help clients with R&D, ensure that they are keeping on top of their R&D rather than rushing to prepare for a last-minute R&D tax relief claim.

Our team can help no matter what is happening in your clients’ so get in touch today.

Adam Bointon

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.