UK-Audit-Checklist - Swanson Reed | Specialist R&D Tax Advisors

Section 1: Project Eligibility

1. What was the main purpose of your project?

To resolve a specific scientific or technological uncertainty to achieve an advance in the field. To create a new product or process using standard methodologies for our industry. To conduct market research, develop a commercial strategy, or improve a business process.

2. Could a competent professional in the field have easily worked out how to achieve your project's technical goals?

No, the solution wasn't readily available and couldn't be deduced from public knowledge. Probably, with a bit of standard research and routine application of known principles. Yes, it was a straightforward engineering or software development task.

3. Did your team follow a systematic project of experimentation and analysis?

Yes, we used a structured approach like forming a hypothesis, testing, prototyping, and analysing results to guide development. We did some informal trial-and-error but didn't formally document the methodology. No, we built the final version from the start based on a clear, pre-existing plan.

Section 2: Qualifying Expenditure

4. How did you determine the staffing costs (PAYE, NIC, pension) included in your claim?

We used timesheets or a similar reliable method to track the exact time employees spent directly engaging in the R&D activities. We made a reasonable, good-faith estimate of each person's time based on their role and project involvement. We claimed a flat percentage of the entire technical team's salary costs without detailed review.

5. For staff who were not 100% focused on R&D, how did you apportion their time?

Our records clearly separate their qualifying R&D activities from their routine operational duties. We estimated a percentage split retrospectively, without detailed daily records to back it up. We claimed their entire salary, even though they performed other commercial duties.

6. What other costs (consumables) are you claiming?

Only materials, software licenses, and utilities (e.g., power, water) that were directly consumed or transformed during the R&D process. We included some general business overheads (e.g., rent, rates, or general telecoms). We claimed the cost of materials that went into the final, commercial production units sold to customers.

Section 3: Record Keeping

7. What kind of documentation do you have for the project?

We have detailed technical documents, test plans, results, project meeting notes, and a final narrative that outlines the initial uncertainty and the work done. We have some emails, presentations, and general project plans, but lack a formal technical narrative. We have very little documentation and would rely entirely on the memory of the staff involved.

8. Can you easily link the costs in your claim to the specific R&D activities?

Yes, our accounting system is set up to track R&D expenses per project, and we can provide a clear audit trail with invoices and payroll records. It would take a lot of work to pull together the financial evidence from different places in our ledgers. No, our R&D costs are mixed in with our general operational expenses.

9. Who was the "Competent Professional" leading the technical aspects of the project?

We have an identified individual with the relevant expertise and experience in the field who can explain the technical challenges to an HMRC inspector. The project was managed by someone without a deep technical background in this specific field of science or technology. We don't have a designated technical lead for the project.

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Low Risk (0-10 points): Looking Strong

Your score is . Your answers suggest you have a robust process for claiming R&D tax relief. Your documentation, cost tracking, and understanding of project eligibility appear to be well-aligned with an HMRC inspector's expectations.

Next Step: Continue your excellent record-keeping practices. Ensure your Additional Information Form (AIF) clearly tells the story of your R&D project, from the initial uncertainty to the final conclusion.

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Medium Risk (11-25 points): Caution Needed

Your score is . Your claim may be valid, but there are potential weaknesses HMRC could challenge during an enquiry, particularly around documentation or the apportionment of costs. You might be asked to provide more detailed evidence.

Next Steps: Focus on strengthening your documentation. Write a technical report retrospectively if you need to. Review your cost calculations and ensure you have a reasonable and logical basis for any estimates made. Consider having your claim reviewed by a specialist.

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High Risk (26+ points): Urgent Action Required

Your score is . Your answers indicate a high risk of your claim being rejected. There appear to be significant gaps in eligibility, cost calculation, or evidence. Submitting a claim in this state could lead to an HMRC enquiry and potential penalties.

Next Steps: Do not submit your claim without a fundamental review. Critically re-evaluate whether your project meets the strict HMRC definition of R&D. You should urgently seek advice from a reputable R&D tax relief specialist.

We're not around right now. But you can send us an email and we'll get back to you, asap.

HMRC R&D Enquiry Readiness Tool

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