by Simon

March 31, 2020

What's the right way to write down worker time in an R&D tax claim

For the purposes of R&D, recording an employees time has to be representative of the true time spent involved directly or indirectly on a qualifying project.

There are a great number of completely free tools that might help record the actual time the employee spends on a project and may be used.

You are able to claim 230% of director and worker wages who are actively involved in a Research and development project. Workforce costs are a tax-deductible expenditure for the purpose of Research & Development tax credits.

Of course, staff members can find themselves splitting time over a variety of assignments in an organization.

It is very important that a fair assessment of time is calculated for inclusion in your claim.

Here are the two types of staff costs:

  1. People contributing to figuring out the scientific barrier in the project directly
  2. And next support staff members who’re involved in the job in some other way e.g. an Ops Director loosely engaged in an undertaking in some capacity. In plain English, a staff member involved in qualifying indirect tasks.

When determining the data you will want to evaluate the nature of their role in the plan together with the time-span they were taking part.

Now let us check some basic questions you can ask yourself:

  • Exactly what R&D activities did the worker handle?
  • How much time did these members of staff spend involved with the project?
  • What qualifying projects did the employee work on during the time frame?

Recording personnel expenditures in a project

Clearly, keeping control of every intricate area of a Research and development project can some times be overwhelming. All too frequently ‘business as usual’ gets in the way despite your best intentions to keep full control of every aspect of the R&D project.

I mean, come on, be realistic…you have a firm to take care of and paralysis by analysis has sunk many companies as they lose focus of what’s important – running the business.

Most businesses have spent company funds on campaigns and only figured out after the occasion that they may manage to recover some of their expenses.

Trying to unravel precisely how much time a staff member has utilised on an undertaking can often be extremely challenging.

It’s very important that tasks are looked at in the right way and staff units of time are noted down accurately. Make absolutely sure there is some corroborating information and facts to help and if you are unclear, we’re happy to help.

Where every single aspect of project timekeeping isn’t available look at what info is available and use a degree of critical judgement. Can you logically justify 100% of individuals time throughout the length of the R&D activities?

As we have stated, there are free tools accessible that can help with the tracking of employees work. Clockify is one such tool and their site can be found here: https://clockify.me/

When recording your staff time in a job it usually helps you to do this concurrently alongside the project.  Where we fit into the process is that we actively help our clients create better processes so that year-on-year your award is safely optimised so no stone is left unturned.

Should you need help to ask what you need to be logging and when you can call one of our helpful advisers.

Depending on guestimates to assess team members time is risky territory. You should have some real justification for the allotment of time used. We suggest that you look at the project in its entirety and then break it down into small, bite-sized chunks. Who needs to be included in the project and why?

At all times, you’ll want to make sure that the time measured is legitimate so as not to falsify a claim that may leave your small business exposed to a minefield of risk later on.  HMRC is pursuing a large volume of businesses that have filed incorrectly.  These businesses will be subject to penalties plus interest most of the time.  This highlights the importance of using specialists.

Our team are happy to ‘hold your hand’ and provide the pragmatic assistance and support you need to safely enhance your claim.