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What staff roles can be included in an R&D tax credit claim?

Individuals from different parts of your business may be involved in your R&D. While a developer or an engineer is more likely to be involved in R&D than a marketing executive, you should always assess an individual’s involvement on the role they actually performed in a qualifying project, rather than just their job title.

An individual’s official job title is less important than a determination of whether they, in fact, undertook qualifying direct or indirect R&D activities.

How to identify staff costs

Firstly, work that qualifies for R&D tax relief must be relevant to your trade and be part of a specific project seeking an advance in science or technology.

Once you identify that you have a qualifying R&D project, you need to consider the boundaries of that project and then what project expenditure can form a part of your claim. The largest R&D cost in many claims is often the staffing costs of those individuals involved in the R&D.

You need to identify not only who within your business was involved in those projects, but what activities they performed and what proportion of their overall time was involved in those specific R&D activities.

Recordkeeping for R&D tax relief

The size of your business, the overall number of employees you have and the nature and quality of the records that you keep will affect how readily you can identify who was and who wasn’t involved in your R&D and to what extent.

In respect to qualifying activities, the guidelines state:

To directly contribute to achieving an advance in science or technology, an activity (or several activities in combination) must attempt to resolve an element of the scientific or technological uncertainty associated with achieving the advance.

The guidelines clearly stipulate what activities do not fall within this definition and what indirect or supporting activities will qualify for inclusion in an R&D claim.

So first, you will need to identify which staff worked on the relevant projects. Then you will need to look more closely at what activities each of those individuals performed to see whether they were directly or indirectly involved in the R&D.

For example, your CTO or senior engineers may be obvious candidates for inclusion as having been directly involved in R&D, less so your marketing director or sales manager, as their activities should be focused on commercial aspects and customer engagement.

This isn’t a hard and fast rule though so if your sales manager happens to hold particular skills or qualifications and may in fact have been involved in the R&D over and above their normal day to day activities then you may be able to include part of their time.

Similarly, your CTO’s executive assistant may spend a proportion of their time writing up notes of project meetings, which would be a qualifying indirect activity.

As mentioned earlier, don’t rely too much on the formal job role, look rather at what activities each individual actually performed.

Have a question for our team?

It can be complicated to submit an R&D tax credit claim to HMRC’s exacting standards.

Get in touch with our team of chartered tax advisers, chartered accountants, lawyers, sector specialists, former HMRC inspectors and quality assurance experts to access expert guidance for your claims.

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