With the end of the calendar year in sight, it’s time to review the R&D tax credit reporting that you are shortly going to be asked to deliver.
TimeControl has been used for R&D tax credit reporting since it was first created and here at HMS we are well familiar with the process. Many governments in the US, Canada, Australia, UK and Europe have some kind of Research incentive program. It often occurs at both the federal and state levels. Virtually all jurisdictions have similar requests and TimeControl is well suited to the requirements of this type of tax reporting.
When creating a request for an R&D tax credit or to report on R&D grants or any similar government sponsored program, the needs are often the same. There must be timesheets used to track the time spent on the reported work. Those timesheets must track the time at a “sufficient level of detail” usually at the task level. The people who work on the projects must be eligible for the program. That usually means that they are residents of the appropriate jurisdiction and that their work is not covered under any other program. Finally, the accounting that comes from Finance must balance against the report. So the values in the request for credit has to match the values in payroll or invoices received etc.
TimeControl was designed with this kind of requirement in mind. As a multi-function timesheet it works well in the Finance structure with auditable data. As a project-oriented system, it works well in project management structure with projects and activities and as a multi-function system the flexibility of TimeControl’s data allows meta data with user defined fields to tag activities and people as eligible for different programs. That makes reporting for R&D simple.
The TimeControl website has an entire portal of resources for using TimeControl for R&D Tax Credits including a white paper that explains the triangle audit that is often required when an audit occurs. Other resources include webcasts, case studies and slide presentations.
You can find the TimeControl Research and Development portal at TimeControl.com/use-cases/r-and-d-tax-credits or contact a TimeControl Specialist at TimeControl.com/contact.
With the New Year now behind us, many organizations are turning their attention to closing the year-end and starting R&D Tax Credit calculations. Many governments at the federal, state, provincial and regional level have tax credits available under certain conditions. TimeControl is often used for R&D Tax Credit tracking because of its ability to track people and tasks at levels that will pass an R&D Tax Credit audit.
When creating an R&D Tax Credit tax return, several elements are almost always required. There must be a plan that outlines what is intended, when it should occur and what type of resources are used. There must be timesheets to track the time spent on the tasks of the R&D projects along with who did those tasks, where those resources are based and how they are paid. Finally, there must be an accounting of the value of the work that matches the timesheets, the payroll and the job costing, and which can be associated back to the original plan.
TimeControl is ideally suited for this role. With links for popular project management tools like Microsoft Project, Primavera, BrightWork and more and to ERP systems like SAP, Oracle and Microsoft Dynamics, TimeControl can be the auditable trail of project actuals that serve both the Project and Finance processes within the business.
We keep an R&D Tax Credit Resource Portal on the TimeControl.com site at TimeControl.com/use-cases/r-and-d-tax-credits. It includes recently updated White Papers, Slide presentations and screen shots of TimeControl reports which can be requested from HMS Support.
Find out more on the TimeControl.com site or contact us at firstname.lastname@example.org to see how TimeControl can help with your R&D Tax Credit reports moving forward.
We were delighted this week to receive a letter from Andre Richard, the Director of Research and Development at EXFO a worldwide design and manufacturing company specializing in telecommunications. You may not know EXFO yourself but your phone probably does. EXFO works with suppliers like Verizon, AT&T, Vodafone, Orange and many, many more on testing and service assurance systems.
While all letters of praise from clients are extremely exciting to the HMS Staff and TimeControl team, Andre’s letter is particularly heartwarming because of the long standing use of TimeControl at EXFO. “We have used TimeControl for more than 20 years to capture the efforts of our R&D team,” Andre explains.
TimeControl has been used at EXFO as part of their research and development tax credit applications and has passed the test of audits more than one.
We’re very proud to count Andre and the entire EXFO team among our many clients and look forward to many more years of working together.
You can read Andre’s letter in its entirety at:
Question: We now have clients sign paper timesheets to show they were approved. How would we deal with this requirement in an automated timesheet like TimeControl?
This is a great question and one faced by any organization that is shifting from paper-based timesheets to an automated system. Signature approvals are designed to have evidence that the person who signed the document actually saw the document they signed and their signature signifies their approval of the content. There are two main areas of reluctance for auditors to accept an automated version of a signature in a computer-based timesheet:
- How do we know that the person whose name is now on the timesheet is actually the person who approved it? And;
- How can we be sure that the data in the view the person approved has not been changed.
In TimeControl, both of these concerns are dealt with in the way that TimeControl deals with auditability of the movement of timesheet ownership.
When a timesheet is created. TimeControl notes in the database the user name and the date/time. Then, whenever the timesheet changes ownership through releasing it for approval, the timesheet being rejected, updated re-released, approved and ultimate posted, TimeControl creates an entry in the Timesheet Release Log.
If a user is using the Alternate User function to log into TimeControl as someone else, TimeControl accommodates this also. In this case the audit log will show both the person who had the responsibility of releasing or rejecting the timesheet as well as who the actual user was who performed the action.
Since this means that there is no reason to share one’s credentials to get into TimeControl, virtually all financial auditors HMS has encountered accept the user name entry in the audit log as equivalent to a signature on a piece of paper. This has been tested in audits by authorities such as both Revenue Canada and the US IRS for R&D Tax Credits, Defense Contract Audit Agency audits, Sarbanes-Oxley compliance audits and countless other situations where timesheet data is part of an audit.
To be certain that this functionality will pass your own auditing standards, you should consult your Finance team and, if need be, have them speak to the technical experts at HMS.
In today’s economy, maximizing innovation can make the difference between success and failure. One way governments help companies to achieve this goal is through Research and Development tax credits. There are R&D tax credit programs in many countries and regions including the US, Canada, Australia, the UK and the EU. Governments have determined that offering R&D tax credits benefits citizens in numerous ways including promoting high tech jobs in the region, improving competitiveness of local firms and the long term benefits that come from capitalizing on cutting edge technology.
Every R&D program has reporting standards and controls that allow the government giving the credit to ensure that the funds are being spent on eligible R&D activities.
While there are different rules for R&D tax claim documentation in different jurisdictions, one thing is common: tracking the hours of your R&D workers with timesheet documentation is the best way to prove that the appropriate work was completed by the appropriate personnel.
TimeControl has been used for years by organizations in different countries to document R&D tax claims. As an activity-based timesheet, TimeControl is ideally suited to deliver on the three levels of R&D financial audit that we refer to as the Triangle Audit.
The TimeControl website contains an R&D tax claim resource portal with tools, white papers, presentations and examples of how TimeControl can be used to help your tax claim process and to free your technical experts from tax claim paper work and get back to innovating!
To find out more about how TimeControl can help with your next R&D tax credit, see our TimeControl Use Case area for R&D or contact HMS at email@example.com.