Every claim needs an additional information form that describes the R&D projects and breaks down the qualifying costs. Keep project records that show the advance sought, the uncertainties and how the work resolved them. That is the whole documentation rule in two sentences, and it points at the two things an enquiry tests: whether the projects were R&D as the guidelines define it, and whether the costs claimed were incurred on those projects. This page sets out what HMRC expects, what to keep during the year, how to connect the two, and where claims usually fall short.
What the tax authority expects
There is no prescribed form of record. Company law and the Corporation Tax rules require a company to keep records sufficient to make a correct and complete return and to preserve them for 6 years from the end of the accounting period. For R&D, HMRC's expectation is expressed through the additional information form and its guidance: for each project, the field of science or technology, the baseline of knowledge at the start, the advance sought, the uncertainties faced and how the work resolved them, and for the claim as a whole the qualifying costs by category.
Two features of HMRC's approach shape the records. First, the assessment of uncertainty is made by reference to a competent professional in the field, so claims should be able to show which competent professionals judged the uncertainty and what relevant expertise they had. Second, HMRC's enquiry teams check the project narrative against the cost breakdown and against the company's accounts and payroll, so the narrative, the timesheets and the ledger need to tell one story.
Records to keep during the year
| Record | What it shows | Who keeps it | When |
|---|---|---|---|
| Project start note | The field, the baseline, the advance sought and the uncertainties, in the competent professional's words | Technical lead | When the project starts |
| Design records, test plans, experiment logs, version control history | The work done to resolve the uncertainties, including failures | Engineers and scientists | As the work happens |
| Time records by project | Hours each employee spent directly and actively engaged in each project | Everyone whose staffing costs are claimed | Weekly or by sprint |
| Purchase records coded to projects | Consumables, software, data, cloud and subcontractor costs by project | Finance | At purchase |
| Contracts with subcontractors, staff providers and customers | Who decided to undertake the R&D, where the work was done, connection status | Legal or finance | Before the work starts |
| Project end note | When the uncertainty was resolved or work stopped, which closes the R&D period | Technical lead | At the end |
| Payroll and pension records | Earnings, employer National Insurance and pension contributions behind the staffing costs | Payroll | Monthly |
None of these records has to be created for the claim. A ticketing system, a lab notebook, a commit history and a timesheet kept for project management serve, provided they can be tied to a project and a period. A note written in April describing what was not known is worth more than a narrative written the following March explaining what proved hard.
Linking records to projects and costs
The additional information form is the link. Every technical record carries a project name; every timesheet entry and purchase carries the same name; and the claim workpapers map each project to its form entry and to the cost categories. The minimum workpaper for one project:
| Item | Content |
|---|---|
| Project | Name, field of science or technology, start and end dates, competent professional |
| Narrative | Baseline, advance sought, uncertainties, work done, outcome, with pointers to the records that evidence each |
| Staffing costs | Employee, role, hours or percentage, earnings, employer NIC and pension, source of the apportionment |
| Externally provided workers and subcontractors | Provider, contract date, connection status, location of the work, payment, 65% applied |
| Consumables, software, data and cloud | Purchase, date, amount, how used in the project, any part incorporated in products sold |
| Exclusions considered | Why the work is not routine, aesthetic or post-resolution, and why overseas costs are in or out |
Common gaps
- Narratives written by the advisor, not the engineer. HMRC's caseworkers ask to speak to the competent professional; a narrative the professional cannot stand behind fails at that point.
- Uncertainty described as the company's own. "We did not know how" is not enough; the question is whether a competent professional in the field could readily have deduced it.
- Apportionments without a basis. Round percentages of staff time set at year end. A reasoned, consistent method is acceptable; a guess is not.
- Costs that do not reconcile. Staffing costs that cannot be traced to payroll, or subcontractor costs with no contract.
- Location unrecorded. Since April 2024, work by subcontractors and externally provided workers outside the UK is generally excluded, so the records must show where it was done.
- No end point. Claims that run every project to the year end rather than to the point the uncertainty was resolved.
Illustrative example
Illustrative example. Calder Instruments, a hypothetical company, claims for a flow sensor project. Its technical director's note from the project's start records that no available sensor held accuracy across the required temperature range and names the two approaches to be tried; the engineers log time to project FS-4 and tag their test builds; finance codes the test materials and a UK consultancy's invoice to FS-4; the contract shows Calder specified and decided the work. When HMRC opens a compliance check, the claim is answered from the records in a week. The same project with a year-end narrative and a 60% staff estimate would take months and might fail.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.