Barnaby Davies

Thank you. I did eventually find this too... https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird82100 and specifically Where the underlying legislation requires not only that there be expenditure, but also payment, this means that the amount must actually be paid. While the payment in these circumstances need not have been made by the end of the accounting period in which the expenditure is shown, it must have been made before the claim to R&D tax relief can be valid. This approach does not alter the time limits for making a claim, but it does mean that the claim cannot be accepted before payment is made. This isn't easy to find and you have R&D 'specialists' making claims of exactly the opposite. It's taken me two years to find this (no kidding).

Can any clarity (or first hand experience) be offered on the following topic please which I do not think is documented clearly anywhere and for which I have received conflicting guidance. I am a director in an early stage technology start-up which was incorporated in 2020. The business is pre-revenue and has received no investment other than loans from myself and one other director. I am reasonably confident that some portion of our costs are eligible for an R&D tax credit. My query is this. My co-founder and I have expended literally thousands of hours on the business. We have good records, a patent filing, working software and a lot besides to evidence this. What I wish to establish is what means exist to support an R&D claim for the effort we have expended. We have received guidance from some fairly well qualified quarters that this isn't claimable but equally, we have received guidance from R&D tax credit specialists that it is absolutely claimable. In practice this claim would comprise of use collating the records of our work done and assigning a rate (drawn from our other professional work with clients) to assign a value to the work done. Or, some other similar approach. We have no appetite for risk and wish to exercise any claim earnestly and in good faith. It's just not clear to us whether we can include this or not. Thank you in advance.