--- name: rd-tax-credit-eligibility-analyzer description: "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 estimated inclusion, disqualifying factors, and a documentation checklist. Use when assessing whether a project qualifies for R&D tax credits, scoping qualifying expenditure, or preparing to substantiate a claim." argument-hint: "[activity-description] [jurisdiction]" allowed-tools: ["Read"] --- # R&D Tax Credit Eligibility Analyzer ## 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](https://docs.anthropic.com/en/docs/claude-code/skills) — markdown with YAML frontmatter at the top. **Installing in Claude Code:** - `~/.claude/skills//SKILL.md` — auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects) - `/.claude/skills//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. 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