Expertise
- Finance
- Financial Services
Summary
Most costs within an R&D claim are likely to be staff costs and consumables. Recent experience is that HMRC are examining claims more closely, and it is therefore important to remind oneself of what costs qualify so that any enquiries in this area can be kept to a minimum.
All costs have to be attributable to the qualifying R&D project(s), and the key qualifying cost categories are:
- staffing costs – pro-rated for staff who do not spend 100% of their time on R&D;
- consumable items such as fuel, electricity and water;
software used in the R&D project.
In order for the costs to be qualifying, they have to be revenue in nature.
Special rules for subcontractors and agency workers
There are limited circumstances when a large company can claim for costs in relation to work subcontracted to another company.
For SMEs, only 65% of the subcontracted costs can be claimed, although there are special rules for connected parties. Similarly, only 65% of costs incurred on agency workers can be claimed for both SME and large companies, although again there are special rules for connected parties.