What is a Competent Professional in R&D Tax Credits?
When you’re claiming for R&D tax credits, it’s important to show that your project meets HMRC’s set of guidelines. One key part that HMRC will look for in your R&D report is whether you’ve identified the ‘competent professionals’ who were part of the project. Highlighting their contributions to your project is integral to the success of your claim.
So, What Exactly is a Competent Professional?
The competent professional is the person in your business who assesses which of your business activities count as R&D. Based on their knowledge, skills and experience, they will be able to assess the technically challenging aspects of your work, as well as a project’s routine elements which do not count as R&D. Usually this is someone involved in the project with professional expertise relevant to the technological advancement being pursued. While your advisor is familiar with R&D, their expertise is in using the same language as competent professionals and translating that into terms HMRC understands. However, the role of the competent professional is to explain the details of how the product or service operates.
How Does HMRC Define a Competent Professional?
According to HMRC:
‘A competent professional in the field can judge if a scientific or technological advance is needed to solve a particular problem’.
This person can:
- Judge what is or is not an advance on the current state of what is known and understood
- Identify R&D activities seeking an advance and state where they begin and end
For a manufacturing business this might be a chief engineer with over 20 years of experience. In medicine, this could be heart surgeon who’s been awarded the highest accolade in Cardiology.
Why Might a Competent Professional be Incorrectly Documented in a Report?
HMRC states that it’s not enough to have an ‘intelligent interest’ or work in the field. Many reports don’t distinguish between having this ‘intelligent interest’ and being a competent professional. Given this uncertainty, these key indicators can clear this up. A competent professional should have:
- High level qualifications in the field, alongside continuous professional development
- A significant number of years’ experience working at a high level in the field
- Good scientific publication record in the field
- Industry awards specific to their field
- Any other public recognition for contributions to the field
By using these criteria to show how your team is qualified, HMRC will take your words with more consideration and your judgement will hold more authority.
The Impact of Competent Professionals Included in R&D Claims
Clearly illustrating the presence of a competent professional in your R&D reports has many benefits. These specialists can clearly define what the baseline level of knowledge is and why our advancements are advancements. These professionals can also establish the precise start and end points of a project. Establishing a timeline of projects and stages of R&D is crucial when filing a claim. It highlights the systematic approach you’ve taken to address technological uncertainty making it easier for HMRC to approve your R&D. Properly documenting the competent professionals in your R&D reports can reduce the chance of an HMRC enquiry.
Secure the Tax Advantages You’re Entitled to
Next time you’re checking your report, make sure the competent professionals are clearly highlighted to reduce your chances of an HMRC enquiry. Having read dozens of reports that have missed a section demonstrating the competency of the R&D project leader, it’s clear to see why so many claims fail. Competent professionals bring technical precision and a compelling technical narrative to your reports.
In recent news, HMRC submitted an enquiry into an R&D claim placed by Get On Board Ltd (GOL). However, the enquiry was overturned as a tribunal successfully proved the input of competent professionals, Mr Cahill and Mr Guppy. It was a big win for the company and shows that illustrating the involvement of these experts is critical in producing accurate, credible, and compliant R&D reports. Including this information in your report shows HMRC that your project qualifies for tax relief, helping you secure the tax advantages you’re entitled to.
