The CFO's Due Diligence Checklist Before Making an R&D Tax Relief Claim

R&D Tax Relief Starts Long Before the Corporation Tax Return

When finance leaders hear the words "R&D tax claim", many immediately think about qualifying costs, tax computations and submission deadlines. In reality, the strongest R&D claims begin months before the corporation tax return is prepared. Successful claims are built on governance, planning, documentation and collaboration between finance teams, technical experts and specialist advisers.

As HMRC continues to increase scrutiny of claims, CFOs have become central to ensuring claims are accurate, well-evidenced and commercially robust. The question is no longer simply whether the business qualifies. Instead, it should be whether the business can confidently evidence every aspect of the claim if HMRC asks. That shift in mindset changes everything.

The CFO's Role Has Changed

Historically, R&D tax relief often sat within the finance or tax department. Today, it has become a board-level governance issue. Finance leaders now oversee risk management, internal controls, financial reporting, compliance, funding strategy, investor confidence and cash flow forecasting. R&D tax relief touches every one of these areas. A poorly prepared claim can create unnecessary exposure. A well-prepared claim strengthens governance while unlocking valuable funding.

Step One: Have We Actually Identified Every Qualifying Project?

Many businesses start by reviewing costs. This is the wrong place to begin. Instead, start with the projects. Ask what technical challenges were solved this year, which projects required experimentation, where the business faced technological uncertainty, what failed before a solution was found, which developments required specialist expertise, and what wasn't readily deducible by a competent professional. Only once qualifying projects are identified should financial analysis begin.

Step Two: Has a Competent Professional Informed the Assessment?

The assessment should be informed by a competent professional with relevant knowledge and experience in the field of science or technology, able to explain the existing technological baseline, the uncertainty encountered, why existing knowledge wasn't sufficient, and how the team attempted to overcome the challenge. HMRC does not prescribe a job title or require one named individual to manage every part of a claim, though it helps to know where that input came from early in the process.

Step Three: Is Our Documentation Strong Enough?

Documentation often determines whether a claim withstands scrutiny. Useful evidence includes technical specifications, design documents, engineering drawings, software repositories, testing reports, prototype records, internal project notes, meeting minutes, technical emails and project plans. Importantly, evidence doesn't need to be created specifically for HMRC. It simply needs to demonstrate that qualifying work genuinely took place.

Step Four: Have We Correctly Identified Qualifying Costs?

Not every project cost qualifies. Finance teams should carefully review staff costs, employer NIC, pension contributions, externally provided workers (subject to overseas restrictions for periods beginning on or after 1 April 2024, with statutory exceptions), qualifying subcontractor expenditure, consumable materials, software licences directly supporting qualifying activity, and data licences and cloud computing costs (in scope for periods beginning on or after 1 April 2023) where applicable under current rules. Equally important is identifying expenditure that should not be included. Accuracy matters more than maximisation.

Step Five: Have Grants or Subsidies Affected Eligibility?

Government funding can influence how qualifying expenditure is treated. Before preparing a claim, CFOs should review Innovate UK funding, regional grants, local authority funding, research partnerships, university collaborations and customer-funded development. Understanding how these interact with the current legislation helps ensure claims remain compliant.

Step Six: Are We Meeting Current HMRC Requirements?

The R&D landscape has changed considerably. Finance teams should confirm that the Additional Information Form has been completed where required, that claim notification requirements have been considered, that the correct accounting period has been identified, that the appropriate legislation has been applied, and that relevant claim deadlines are being monitored. Missing procedural requirements can invalidate an otherwise legitimate claim.

Step Seven: Can We Explain the Story?

One of the simplest tests is this: if HMRC asked your business to explain the project tomorrow, could your team do it clearly? Strong claims tell a coherent story. What problem existed? Why was it difficult? What uncertainty existed? How was it addressed? What knowledge was gained? The financial schedules simply support that story.

Step Eight: What Happens If HMRC Opens an Enquiry?

This question should be asked before submission, not afterwards. Finance leaders should understand who will respond, who prepared the technical narrative, who owns supporting documentation, who will attend technical discussions, and whether external specialists will provide enquiry support. Knowing these answers provides confidence should questions arise.

Step Nine: Have We Integrated R&D into Financial Planning?

R&D shouldn't be viewed as a one-off annual exercise. Leading finance teams incorporate it into budgeting, forecasting, quarterly board meetings, innovation planning, capital allocation and cash flow modelling. By identifying qualifying activity throughout the year, businesses improve both claim quality and financial decision-making.

Step Ten: Are We Working with the Right Specialist?

This may be the most important question of all. A specialist adviser should be able to demonstrate technical expertise, legislative knowledge, industry experience, transparent methodology, strong documentation, HMRC enquiry support, and collaborative working with accountants and finance teams. The right adviser doesn't simply prepare claims. They strengthen governance.

Why This Checklist Matters

A successful R&D claim isn't judged solely by the amount recovered. It should also withstand scrutiny, reduce compliance risk, improve governance, support financial planning, and increase confidence across the board. That is the standard today's CFO should expect.

How PSS Tax Supports Finance Leaders

At PSS Tax, we guide CFOs through every stage of the R&D process, from early project identification through to claim preparation, technical report writing and HMRC enquiry support. Our collaborative approach ensures finance teams, accountants and technical specialists work together to produce robust, evidence-based claims that maximise legitimate relief while protecting the business.

Final Thoughts

The best R&D claims are never rushed. They are planned, documented, governed, reviewed, and supported by specialists. For today's CFO, due diligence is about more than satisfying HMRC. It's about protecting the business while unlocking funding that supports future growth. Because good governance doesn't slow innovation. It strengthens it.

About PSS Tax

PSS Tax partners with CFOs, accountants and innovative businesses to deliver technically robust R&D tax relief claims. Through collaborative working, specialist expertise and enquiry support, we help businesses recover legitimate funding with confidence.