Blog: Tax Talk – Who is the Competent Professional?

Date: February 3, 2020

By Nigel Holmes, Head of R&D Technical Operations at Catax

As R&D tax relief consultants, we often mention “The Competent Professional” concept, so who is this person?

The actual term doesn’t appear that often in the definition of R&D taken from the guidelines, here are two extracts where the term is used:

“Overall knowledge or capability in a field of science or technology means the knowledge or capability in the field that is publicly available or is readily deducible from the publicly available knowledge or capability by a competent professional working in the field.”

“Scientific or technological uncertainty exists when knowledge of whether something is scientifically possible or technologically feasible, or how to achieve it in practice, is not readily available or deducible by a competent professional working in the field. Uncertainties that can readily be resolved by a competent professional working in the field are not scientific or technological uncertainties.”

Companies, with their adviser’s help, self-assess their right to claim R&D tax relief and, as part of that process, are holding themselves out to be competent professionals themselves. This is why, at Catax, all of our R&D reports contain a mini biography to establish the credentials of the key technical personnel, whether they be employees or subcontractors.

The guidance then requires the claimant company to reflect whether another company, perhaps a competitor, where someone with similar credentials will work, has already solved these uncertainties, and the solution is publicly available. Therefore, if the claimant company either, as far as they are aware, are trying to resolve the uncertainty for the first time or the solution is not publicly available then this would meet that part of the R&D definition.

Another key part of the terminology worth highlighting is the term “not readily deducible”. When speaking to clients about this concept, they often reply in the first instance with comments along the lines of “a competitor would have reached the same solution eventually”. This does not mean it is “readily deducible”. Readily deducible should be interpreted in a common sense way – is the uncertainty easy, or straight forward to resolve? If the uncertainties are challenging, time-consuming, require testing, trialling, prototypes, various iterations etc, then these are indicative of not “readily deducible”. If a company states that it took the competent professional a couple of hours to gather their thoughts and provide the solution, that they already had a good idea on the solution then this is indicative of not being R&D.

To conclude, the concept is here to help benchmark a project against anything already done in that particular field of science or technology and is a useful way to help establish whether R&D is present.

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