A number of procedural R&D changes have come into force. These are aimed at tightening up on what HMRC believes is a large number of incorrect claims, particular by smaller entities, by ensuring that claims must be accompanied by minimum of supporting information and explanation.
1) For all claims made after 8 August 2023, a separate Additional Information Form has had to be completed setting out how each of the R&D projects undertaken meets the definition of ‘qualifying R&D and detailing the qualifying expenditure incurred. It includes most of the information which you might previously have expected to find in an R&D report prepared by an R&D specialist consultant. A report can and should still be submitted to HMRC along with the corporation tax return.
The Additional Information Form must be filed with HMRC online and the corporation tax return including the R&D claim itself must be filed with HMRC within 28 days of the Additional Information Form. The ultimate deadline for making a claim remains a year from the normal corporation tax filing deadline (effectively two years from the accounting period end) but see below.
2) For claims for R&D carried out in accounting periods commencing after 1 April 2023, a company must submit a separate Claim Notification within six months of the end of the period if either it has never made a claim before, or if its last claim was more than three years prior to the notification deadline. If a company’s accounting period is longer than 12 months such that it is deemed to be two chargeable periods for tax purposes, the deadline for notification for both periods is six months from the end of the accounting period.
The notification must nominate an individual in the company as the main person responsible for the R&D claim and provide a high-level summary of the planned R&D activities.
These new requirements represent a significant additional burden particularly for those smaller companies with smaller claims.
There is further bad new on the horizon for smaller companies with the announcement in the recent Autumn statement of a merger of the small and large company R&D schemes from 1 April 2024 which is likely to make the accounting and tax calculation more complicated, hence more onerous for smaller companies.
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Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.
