Can We Claim for R&D Tax Credit Expenses is a question we often hear. By this, we mean expenses that are incurred on R&D by employees for things like travel and subsistence. Traditionally, the rule has been that if they are paid by the company then they cannot be included in the R&D claim as they do not fall into any of the allowable cost categories of expenditure. However, if they were paid for by the employee, and then reimbursed by the company, then they would be allowed on the basis that this is a ‘staffing cost’ – an allowable cost category – and part of the remuneration of the employee.
HMRC have recently clarified that their view of “earnings” and “expenses” under the definition of “staffing costs” for R&D purposes are intended to cover what are essentially contractual costs (other than benefits in kind) rather than out-of-pocket expenditure such as travel and subsistence. Therefore, in the view of HMRC, expenditure such as travel and subsistence would not fall within the definition of “staffing costs” under subsections 1123(2)-or 1123(3) CTA 2009.