Good habits and best practices for tracking R&D claim data

Best practices for tracking R&D dataWhether you outsource your R&D tax relief claims process to a specialist company, or allocate it to more ‘traditional’ finance professionals, the quality of the data used to build the claim can be a big factor when determining its value and integrity.

This is particularly true of projects where staff members’ time has been split between working on a qualifying R&D project and non-qualifying activities.

Poor tracking of project data can lead to guesswork when trying to determine how much expenditure you should be claim. This creates a risk of either claiming too little (and lowering the value of the claim) or claiming too much without providing enough supporting evidence, which could lead to an HMRC enquiry or penalty.

Related: Visit our R&D tax credit calculator.

Over the years, we have identified a few best practices to help companies to optimise their R&D data collection. These ‘good habits’ will pay back in dividends because clarity and consistency of data gives the company confidence that they are squeezing every bit of value from their claim and more importantly it gives HMRC inspector dealing with the claim a clear path towards awarding the requested amount.

Track the independent high-fliers

Communicate to the team the importance of periodically documenting their activities within a qualifying project. This can come in the form of meeting notes, timesheets, emails etc. These activities often happen as a natural part of project delivery but in our experience, team members can sometimes contribute a huge amount to a project while barely leaving a ‘paper trail’. While it’s great to have experts that can work independently and verbal communication is often best, documenting things once in a while will go a long way towards filing an optimal R&D tax claim.

The R&D ‘Champion’

Assign one person the ownership of ensuring R&D activities are tracked during qualifying project. Someone with a ‘bird’s eye view’ of the project– typically a Project Manager – makes an ideal candidate for this. The R&D champion does not need to have an extensive knowledge of the scheme, but should be aware of whether a project he/she is managing is one that qualifies and should have an ongoing awareness of how activities are being tracked by team members.

Email Tagging and Dedicated Wiki Entries

Create a dedicated email address (for example and ask team members and subcontractors to CC this email in all communications relating to the qualifying project’s activities and costs. This will save you having to trawl through multiple email inboxes when it’s time to collate the evidence and ensures that nothing is being missed out.

An additional time-saving measure is to maintain a R&D section on your company’s SharePoint, Wiki or shared network drive and use it to store all of the project plans, technical diagrams, invoices for materials, licensing invoices and all other documentation that you can attach a cost to during a qualifying R&D project.

Source Code Commenting

On qualifying software development projects, ensure your developers are including comprehensive, descriptive comments in all their code – this includes version of the code that will not be used in the end-product. This is considered good coding practice anyway but will also give the person who assessing the R&D tax credit claim a clearer understanding of the process the developers have been through. It also establishes a link between what is being claimed for and the actual work carried out.

These activities are all relatively easy to implement can often merge seamlessly with the company’s usual activities during qualifying projects. We hope you find them useful and if you need any further input how to optimise your R&D data tracking, simply contact one of our team – we’d be happy to hear from you.