A claim for R&D Tax Relief is made in the company’s corporation tax return for the period to which the claim relates. Whilst not mandatory, HMRC strongly recommends that supporting information is submitted, including an explanation of the claim approach and examples of project activities undertaken. Most companies follow the recommended practice. Some, however, prefer to provide this information when requested.
With the new submission process, the provision of detailed information on project activities undertaken becomes mandatory.
On 12 April 2023, two online forms went live; both requiring completion PRIOR to claims submission. The forms relate to the following:
(i) Submission of detailed information through the ‘Additional Information’ form
From 1 August 2023, the completion of the Additional Information form will become mandatory. Failure to complete this form prior to claim submission will result in HMRC disallowing your claim within your tax return.
(ii) Tell HMRC that you are planning to submit a claim
This only applies to certain claimants.
We take a brief look at each of these forms in turn.
(i) The Additional Information form
This form is to be used to provide detailed examples of R&D project activities undertaken. As a minimum, the following will be required, depending on the number of projects being claimed:
- for 1 to 3 projects, a description of all the projects being claimed, that cover(s) 100% of the qualifying expenditure.
- for 4 to 10 projects, detailed descriptions of those projects that account for at least 50% of the total expenditure, with a minimum of 3 projects described.
- for 11 to 100 (or more) projects, description of those projects that account for at least 50% of the total expenditure, with a minimum of 3 projects described.
- If the qualifying expenditure is split across multiple smaller projects, descriptions of the 10 largest will be required.
The form can be submitted either by:
- a representative of the company, or
- an agent acting on behalf of the company.
(ii) Tell HMRC you are planning to submit a claim
(Applies to accounting periods beginning on or after 1 April 2023)
You should tell HMRC you are planning to submit a claim in the following circumstances:
(i) where you’re claiming for the first time;
(ii) you’ve claimed for the previous tax year, but you did not submit that claim until after the last date of the claim notification period (the claim notification period ends 6 months after the end of the period of account);
(iii) your last claim was made more than 3 years before the last date of the claim notification period.
We are clarifying point (ii) with HMRC as this may mean that for example, an existing claimant with an accounting period starting on 1 April 2023 and ending on 31 March 2024, will have to notify HMRC if the claim for the accounting period ended 31 March 2023 is not submitted within 6 months of the end of the accounting period.
With the above changes, planning your claims process will be key. Some points for consideration will include:
(i) Your timetable for claims submission
- Pre-August, your claim and R&D report can be submitted together.
- Post August, ensure that (i) your work incorporates the level of detail required by HMRC on project activities and (ii) the form is submitted PRIOR to submitting your claim in the company tax return.
(ii) Consider your prior year’s claim – was this submitted within the claim notification period? Does it trigger the requirement to inform HMRC that you are planning to make a claim?
(iii) Other changes
- Benefit changes for both SME and RDEC schemes from 1 April 2023.
- Changes in CT rates from 19% to 25%.
- Additional cost categories that may be included in your claims (for accounting periods beginning on or after 1 April 2023).
See further details by clicking the link here: