Most R&D tax credit claims aren’t lost because the work wasn’t good enough. They’re lost or heavily scaled back because nobody wrote anything down at the time. By the time year-end rolls around and it’s time to pull the claim together, the details have gone fuzzy, the useful emails have been deleted, and someone is trying to reconstruct six months of technical problem-solving from memory.
HMRC has a name for this problem, and it’s not subtle. They want contemporaneous records – evidence created while the work was actually happening. Though a reflective narrative written after the event to file the claim is still acceptable, the level of evidence from the time of the event is the report’s source of strength. It now matters more than ever. The proportion of claims HMRC has targeted to open a compliance check into jumped from around 1% to roughly 20% over the past few years, and for enquiries to be closed swiftly, claims backed by real-time evidence hold up far better than ones reconstructed from memory. This is not new to the UK tax regime but is tested more frequently. Evidence holds up far better than ones reconstructed from memory.
Here’s what we suggest companies actually capture, and when in relation to R&D tax claims.
So, What Technical Evidence Should You Capture for Your “What Were We Trying to Do” File?
This is the backbone of any claim, and the easiest thing to lose track of. For every project, even as complementary to existing project tracking efforts, after an InnoFund R&D workshop is provided to R&D spotters keep a running record of:
- The technical or scientific advance you were aiming for, written in plain terms
- The specific uncertainty; what you didn’t know how to do, and why a competent professional in the field couldn’t have just looked it up
- What you actually tried, including the approaches that didn’t work
- How your thinking changed as you learned things
- Which competent professionals were involved and what expertise they brought
The instinct is to only document the successes. However, failed approaches and dead ends are often your strongest evidence, because they prove the uncertainty was real. This also reduces the risk of the same errors being made. A meeting note, a Slack thread, a half-finished design doc, a “here’s why approach A didn’t work” email – these all count, and they’re worth far more collected in the moment than rebuilt from memory later.
What Cost Evidence Should You Track to Prove Who Spent What, On What?
Technical evidence proves the R&D happened. Cost evidence proves what it’s worth, again after an InnoFund R&D workshop is provided to R&D spotters. As you go, keep:
- Where practical, timesheets or time tracking data (meeting notes included) showing what proportion of each person’s estimated time went to qualifying R&D, not a year-end estimate
- Subcontractors and agency workers invoices, tied to the specific project they relate to
- Software, cloud computing, and consumables costs, again linked to the project
- Materials used up in testing and prototyping, with receipts kept alongside the relevant project file
- A simple log of who worked on what, updated monthly rather than reviewed after the end of the year.
Deciding what percentage of someone’s time or a cost genuinely counts as R&D, or apportionment, is one of the most common places claims get challenged. Starting from a time-spent data point you tracked, with some adjustments, is far easier to defend than one you estimated after the fact, though a fair and reasonable assessment based on the facts is still an acceptable approach in our experience.
What Procedural Paperwork and Deadlines Does HMRC now Expect on Time?
A couple of procedural requirements sit alongside the evidence itself, and missing them can sink an otherwise solid claim before HMRC even looks at the technical detail:
- Claim notification: if you haven’t claimed before, or haven’t claimed in the last three years, you generally need to tell HMRC you intend to claim within six months of your accounting period ending, well before the claim itself is due.
- Additional Information Form (AIF): every claim now needs one of these submitted alongside it, setting out the qualifying projects and costs in HMRC’s format. Claims submitted without it get rejected outright.
Neither of these is “evidence” in the traditional sense, but both are claim conditions now. At InnoFund, these requirements are reviewed, prepared and submitted as part of the claim process where applicable.
It is still worth keeping the deadlines in your calendar, in the same way you would for a VAT return.
How Can You Build Evidence Gathering into How You Work, Not Just How You Claim?
The businesses that find claim season painless treat evidence gathering as a habit, not a scramble. A few things that make it easy:
- A shared folder or project tracker where technical notes get logged as part of normal project work, not as a separate compliance task
- A monthly, not annual, time tracking check-in for anyone doing qualifying work
- One person nominally responsible for flagging when a new project might qualify, so the record starts from day one
None of this needs to be elaborate. A dated Google Doc that gets a few lines added after every sprint review beats a beautifully formatted report written from memory eight months later, every time.
Get the habit right, and the claim itself turns into a formatting exercise instead of just an exercise in archaeology. It also pays off if a compliance check does land on your desk, you’ll be pulling from a paper trail that already exists, rather than trying to present mosaic evidence under pressure with a deadline attached. Both can still result in a success defense of the claim, but the former is ideal.
At InnoFund, we can provide practical tracking documents from both a technical and financial perspective, helping you capture your R&D activity, qualifying costs and supporting evidence as the work progresses.
See how SecuRD® helps teams build an evidence trail as development work happens.