There are several methods for determining how much research and development (R&D) work each employee or contractor performs. The nature of the R&D work completed and records on how staff time was spent on these activities determine how an employee's time is allocated.
We have seen many cases where businesses are unaware that they are eligible for R&D tax credits until after the end of their accounting period. In these cases, they often have not kept detailed records of each staff member's time spent on R&D activities and expert advice from a consultant is often required.
The type of records kept – and their level of detail – will differ from one company to the next. Records should be gathered and evaluated to determine if they are adequate to support an R&D tax credit claim.