The R&D Tax Incentive is an elective program. If you elect to register your R&D, you elect to comply with the procedural and record-keeping requirements…..
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The R&D Tax Incentive programme, like company tax in general, is a self-assessment system. As with any Government programme, and particularly any programme linked to taxation, the onus is on the entity to maintain appropriate records as evidence in the event of a future audit. And to make the situation more complex, there are no ‘hard and fast’ rules on precisely what constitutes “evidence”. Fortunately, good business practice is once again on your side.
Clearly, your company is almost certain to keep detailed financial records of its expenses, invoices, payroll and transactions. The main addition required is that some form of time accounting (such as timesheets), while not universal, can be particularly helpful for identifying and proving costs associated with the R&D activities.
More widely, the types of documents that you would prepare and retain as part of good experimental process also serve to act as evidence of your R&D “core” and “supporting” activities.
Overall, we recommend collating examples of this evidence in an “audit file” associated with your R&D claim for each year.
Access RnD can provide guidance on the types of records and evidence that would be particularly useful for your specific type of R&D. Feel free to contact us for a free consultation about your R&D.