Skip to content This library is free, offered as dana. If it helps your work, donate here →
penguin tree ai
← back to libraryDonate here

This is one of 3,622 free prompts in the penguin tree ai library. Sign up once and the whole library opens, with new prompts by email.

open the library →

R&D tax credit eligibility analyzer

Evaluates a business activity or project against R&D tax credit frameworks (US Section 41 Four-Part Test, UK R&D relief, OECD Frascati guidance), returning an eligibility verdict, qualifying expenditure categories with…

download .md

Purpose

Determine whether a specific business activity or project qualifies for R&D tax credits under the relevant jurisdiction's framework, and produce a defensible verdict, the categories of qualifying expenditure to capture, and the documentation required to substantiate the claim. Replaces the guesswork of "is this R&D?" with a structured, framework-anchored assessment finance teams can act on before engaging an advisor.

When to Use

Invoke this skill when the user asks to:

  • Assess whether a project or engineering activity qualifies for R&D tax credits
  • Evaluate an activity against Section 41 (US), UK R&D relief, or OECD/Frascati criteria
  • Identify which project costs count as qualifying R&D expenditure
  • Screen a portfolio of projects for R&D credit potential before an advisor engagement
  • Understand what documentation is needed to defend an R&D claim
  • Distinguish qualifying development work from routine or excluded activities

Inputs Required

Before starting, collect:

  • Activity/project description: What was built, developed, or investigated (2–5 sentences on the technical work)
  • Jurisdiction: US (Section 41) / UK (SME or RDEC) / OECD-general — determines the applicable test
  • Technical uncertainty faced: What was unknown or unproven at the outset, and why an experienced professional couldn't readily resolve it
  • Process of experimentation: How alternatives were evaluated (prototyping, modeling, iteration, testing)
  • Cost categories incurred: Which of — staff/wages, contractor/subcontractor, software/cloud, materials/consumables, supplies — applied
  • Business purpose/outcome: Whether the activity was for a permitted purpose (new/improved product, process, software, formula) or funded by a customer/grant
  • Fiscal year(s): Tax period(s) the activity falls within

If jurisdiction is missing, default to US Section 41 and state the assumption. If cost categories are missing, request them before estimating qualifying expenditure.

Instructions

Step 1: Identify the Governing Framework

Select the test based on jurisdiction and anchor the entire analysis to it:

  • US — Section 41 Four-Part Test: (1) Permitted Purpose, (2) Technological in Nature, (3) Elimination of Uncertainty, (4) Process of Experimentation
  • UK — R&D Relief (SME scheme or RDEC): Advance in science or technology + scientific/technological uncertainty that a competent professional could not readily resolve
  • OECD — Frascati Manual criteria: Novel, Uncertain, Systematic, Transferable/Reproducible, Creative

State which framework applies and why, then evaluate against each of its criteria explicitly.

Step 2: Apply the Framework Test Criterion-by-Criterion

For each criterion, render a pass/fail/partial verdict with reasoning grounded in the activity description:

US Section 41:

  1. Permitted Purpose — Does the work aim to develop or improve a product, process, software, technique, formula, or invention? Note if it's internal-use software (higher bar).
  2. Technological in Nature — Does it rely on principles of physical/biological science, engineering, or computer science?
  3. Elimination of Uncertainty — Was there uncertainty about capability, methodology, or appropriate design at the outset?
  4. Process of Experimentation — Was there a systematic evaluation of alternatives (hypothesis → testing → refinement)?

UK R&D Relief:

  • Advance in the field — Does the work seek an appreciable improvement in overall knowledge or capability, not just for the company but in the field?
  • Scientific/technological uncertainty — Would a competent professional in the field be genuinely uncertain how to achieve the outcome?

OECD/Frascati (general): Assess against all five — Novel, Uncertain, Systematic, Creative, Transferable.

Step 3: Flag Disqualifying and Excluded Activities

Explicitly check for common exclusions that void or reduce a claim:

  • Routine data collection, quality control, or routine software maintenance
  • Style, cosmetic, or seasonal design changes
  • Market research, efficiency surveys, management studies
  • Reverse engineering with no technological uncertainty
  • Activities conducted after commercial production begins
  • Funded research — work paid for by a customer or grant where the taxpayer retains no rights/risk (US); subsidised or subcontracted work affecting scheme choice (UK)
  • Work performed outside the qualifying jurisdiction where geography restrictions apply

List each triggered exclusion and its effect on eligibility.

Step 4: Map Qualifying Expenditure Categories

For each cost category the user reported, indicate inclusion rules:

  • US: Qualified wages (in-house W-2 for direct R&D, direct supervision, direct support), supplies (consumed in R&D, not capital), contract research (65% inclusion, 100% for qualified research consortia), cloud/computer rental for R&D
  • UK: Staffing costs, subcontractor costs (65% for connected/unconnected under SME), consumables, software, data/cloud costs, externally provided workers
  • Note any apportionment required (e.g., % of time on qualifying work) and any statutory inclusion percentages
  • Provide a rough qualifying expenditure summary table based on the categories provided — flag where figures are needed to complete it

Step 5: Render the Eligibility Verdict

Deliver a clear verdict — Likely Qualifies / Partially Qualifies / Unlikely to Qualify — with a confidence level (High / Medium / Low) and the 2–3 factors most driving the verdict. If partial, specify which portions of the activity qualify and which do not.

Step 6: Build the Documentation Checklist

List the contemporaneous evidence needed to substantiate this specific claim:

  • Project records tying activity to the qualifying test (technical narratives, design docs, test logs)
  • Time-tracking or wage allocation supporting labor apportionment
  • Contracts establishing rights/risk (to defend against funded-research exclusion)
  • Financial records mapping costs to qualifying categories
  • Nexus evidence linking each dollar/pound to a qualified activity

Output Format

  • Structure: Framework identification → criterion-by-criterion assessment → exclusions flagged → qualifying expenditure table → verdict with confidence → documentation checklist
  • Length: 800–1,200 words
  • Format: Structured document with a criterion assessment (bulleted pass/fail), one qualifying-expenditure table, and a checklist
  • Sections: Governing Framework → Framework Test Assessment → Disqualifying Factors → Qualifying Expenditure → Eligibility Verdict → Documentation Checklist
  • Tone: Tax director — precise, framework-anchored, appropriately caveated; states verdicts without hedging but flags where professional review is required

Quality Checklist

Before delivering output, verify:

  • [ ] The correct framework is named and every one of its criteria is assessed individually (4 for US, 2 for UK, 5 for OECD)
  • [ ] Each criterion receives an explicit pass/fail/partial with reasoning tied to the activity — not restated definitions
  • [ ] At least the common exclusions (funded research, routine work, post-production) are checked and their status stated
  • [ ] The qualifying expenditure section covers every cost category the user reported, with inclusion percentages where statutory
  • [ ] The verdict includes a confidence level and names the 2–3 driving factors
  • [ ] The documentation checklist is specific to this activity and framework — not a generic list

Notes

  • This is an eligibility screen, not a filed opinion — always caveat that a qualified tax advisor and, for US claims, a formal Section 41 study should confirm before filing
  • The most common failure point in US claims is the Process of Experimentation prong — if the description lacks systematic alternative-evaluation, flag it prominently
  • Funded-research and subcontractor rules materially change the outcome and scheme selection; when contract/rights details are absent, note that the verdict is provisional pending those terms
  • For UK claims, the SME vs. RDEC distinction depends on company size, grants, and subcontracting — surface which scheme likely applies when size data is available

How to use this skill

This file is a Claude Code skill in Anthropic's standard format — markdown with YAML frontmatter at the top.

Installing in Claude Code:

  • ~/.claude/skills/<folder-name>/SKILL.md — auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects)
  • <your-project>/.claude/skills/<folder-name>/SKILL.md — auto-loads only when working in that project (recommended for project-specific skills)

Restart Claude Code or open a new session to register.

Using in Claude.ai, ChatGPT, Gemini, or other AI tools:

  1. Drag this file into a new chat, or copy and paste its contents
  2. Send your task or request as your next message — the AI will apply the skill where it fits

For Claude Code skill details: https://docs.anthropic.com/en/docs/claude-code/skills