Mapping Advances & Uncertainties to Costs

Why Linking Activities to Advances and Uncertainties Matters

HMRC expects to see:

• Activities directly tied to resolving uncertainty

• Evidence that the work contributed to achieving (or attempting to achieve) the advance

• Associated costs clearly aligned to qualifying work

Without this linkage, claims may be challenged as vague or unsupported, even if the project was genuinely innovative.

Step 1: Break the Project into Activities

Start by breaking the R&D project into discrete activities. Each activity should be described in terms of:

• The specific uncertainty it addressed

• The methods used to explore, test, or resolve it

• The expected technical outcome or advance (in capability or knowledge)

Example:

• Activity: Developing a prototype algorithm for real-time data processing

• Uncertainty: Could the system process 10,000 events per second without data loss?

• Advance: Extends known methods to support high-volume, low-latency processing

Step 2: Map Staff and Resources to Each Activity

Once activities are defined, map:

• Staff that are Directly Contributing to R&D Activities (engineers, developers, scientists)

• Staff that are undertaking Qualifying Indirect Activity (R&D project management, people writing up R&D results, people sourcing R&D equipment or materials etc.)

• Materials used/consumed (prototypes, test materials, energy)

• Subcontractors or specialist services

• Software licences or cloud resources

This ensures that all costs claimed are directly related to work addressing technological uncertainties and achieving the advance.

Tip: Keep timesheets or activity logs for staff, even brief notes, to strengthen the connection between work and claim.

Step 3: Identify Qualifying and Non-Qualifying Work

Not all project work qualifies for RDEC. Clearly separating qualifying from non-qualifying tasks reduces the risk of HMRC enquiry.

Qualifying work typically includes:

• Experimentation, prototyping, testing, modelling

• Iterative development to resolve uncertainty

• Material testing or performance evaluation

Non-qualifying work includes:

• Routine administration or management

• Standard maintenance, bug fixes, or operational tasks

• Commercial, market, or user-experience research

Step 4: Document Costs Clearly

Costs should be documented and linked to activities:

• Staff costs: Percentage of payroll costs spent on qualifying work and qualifying indirect activities

• Materials: Used specifically to test or resolve uncertainty

• Subcontractors: Invoices for technical services addressing uncertainty, including testing or building specialist elements of the final product/process/system

• Software/Cloud: Tools and data used to perform R&D activities

Keeping this linkage explicit allows HMRC to see exactly how expenditure relates to qualifying R&D.

Step 5: Use Clear, Consistent Language

HMRC reviewers prefer clarity over technical jargon. Each activity description should:

• Reference the technological uncertainty it addresses

• Describe the advance being sought

• Highlight the output or learning achieved

Consistency between activity descriptions, uncertainty, advance, and associated costs strengthens the claim and simplifies the Additional Information Form (AIF).

Conclusion

Linking activities and costs to technological uncertainties and advances is essential for robust RDEC claims. Breaking work into clear activities, mapping resources, separating qualifying and non-qualifying tasks, and documenting costs with precision not only improves claim defensibility, but also reduces HMRC enquiry risk and strengthens credibility.

Need more information?

Visit Claiming RDEC Index Page for detailed guidance on many aspects of claiming Research & Development Expenditure Credits.

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