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RDECs are typically claimed by companies who encounter significant design or technical challenges which can only be resolved through investment in R&D.
RDECs are typically claimed by design team consultants who undertake their own R&D or, subject to meeting specific tests, where they undertake R&D as part of works contracted to them.
RDECs are typically claimed by building contractors who initiate R&D projects of their own or, subject to meeting specific tests, where they undertake R&D as part of works contracted to them.
Companies overlook the payment requirement condition when claiming cross charges for activities undertaken by staff in another group entity.
Groups don’t make claims, companies do. Groups fail to consider which legal entity owns an R&D project and also fail to demonstrate clear auditability of claimable costs.
A contract clause stating rights over any RDECs alone, without any appreciation of whether the R&D was intended or contemplated, will very likely fail.
Failure to take into consideration the IR35 status of a worker in determining a contractor’s status as staff or EPW can result in a conflicting position being reported to HMRC.
The eligibility of R&D projects rests on the opinion of the CP. Claims fail because the person determining eligibility is not a CP based on HMRC’s definition in CIRD81300.
Companies incorrectly claim the cost of the building work even though all the technological uncertainty was resolved prior to commencement of those works.
Companies confuse the commercial objective of a project as the R&D project, rather than focusing on just the R&D activities within that commercial project.
Companies fail to recognise the correct tax treatment of contracted-out costs resulting in claims being made in the wrong period.
Technological uncertainty is a common feature of many projects and yet the R&D activities to resolve those uncertainties often go unreported because of the lack of any formal process to do so, particularly within large organisations. At TFI Group, we not only have the in-depth knowledge of the legislation and R&D definitions to correctly determine entitlement, but we also have proven processes, including several sampling methodologies agreed with HMRC, which facilitate the efficient identification and valuation of multiple projects across multiple locations and legal entities.
We actively encourage and support the process of live reporting of R&D projects, with training and provision of on-line tools, but this is always supported by a rigorous retrospective review of projects at the end of each accounting period.
All reviews conclude with a detailed feedback session to identify process improvements, increase awareness of eligible costs, improve the robustness of claims and help companies transition to live reporting.
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