Documentation required for research and development tax relief

The government’s tax relief programmes for research and development (R&D) activities are seen as a vital tool for fostering innovation within the UK in an increasingly competitive global landscape.

HMRC became more stringent in assessing claims after several high-profile tribunal cases over fraudulent expenditure claims costing taxpayers millions of pounds.

As a result of political and social pressure from these developments HMRC adopted new guidelines in April 2019 that raised the standard of care required in submitting a claim. It has shown a willingness to launch enquiries into and reject previously accepted claims such as ordering a company to refund paid credits – which could spell financial disaster for a company suddenly finding itself with a large tax bill.

Documentation of research projects is a key element in mitigating enquiries by HMRC and properly supporting any claims that do face enquiry. Case law shows...