HMRC’s new rules for making R&D tax claims

Rightly or wrongly, HMRC have perceived that R&D tax claims made by companies is an area potentially open to abuse. As a result, HMRC's new rules for making R&D tax claims have been introduced from 1 April 2023.  This post discusses the changes and the new forms that require completion after 1 April 2023.

HMRC's new rules for making R&D tax claims

There is now a further two tier process for making an R&D tax claim which has been introduced by HMRC. Firstly completing and submitting the claim notification form, and secondly completion of the additional information form.

Who is required to notify HMRC?

HMRC's new rules for making R&D tax claims potentially affect companies with accounting periods beginning on or after 1 April 2023 where the following applies:

  • You are making a claim for the first time. This would appear to be necessary regardless of whether you have applied to HMRC for advance assurance.
  • You’ve claimed for the previous tax year, though did not submit that claim until after the last date of the claim notification period (this is discussed below)
  • Your last claim was made more than 3 years before the last date of the claim notification.

Claim notification forms

The forms can be submitted either by a company representative (e.g. director) or an adviser who has been appointed by the company.

In order to complete the claim notification form you will need the following details:

  • Your company’s Unique Taxpayer Reference (UTR) which must match the one shown on your company tax return.
  • The main senior internal R&D contact in the company who is responsible for the R&D claim. For example one of the company's directors.
  • The contact details of any adviser who is involved in the R&D claim.
  • The accounting period start and end date for which you’re claiming the tax relief or expenditure credit, this must match the one shown on your Company Tax Return.
  • The period of account start and end date.
  • A summary of the high-level planned activities, for example if you’ve developed software, what it will be used for to show that the project meets the criteria for R&D. Whilst you do not need to include evidence on the form it might be prudent to include these details. In any event, you will need to provide further details on the additional information form.

Once you've completed the form it can be submitted via your Government Gateway account (using your email and password) or via email.

What is the deadline for submitting a claim notification form?

The latest date that companies must submit the claim notification form is 6 months after the end of the period of account that the claim relates to. If companies fail to submit the form by this deadline, their claim will not be valid.

An example

Steve is a director of Perry Ltd and the company's year end is 31 May 2024. The company must submit a claim notification form to HMRC by 30 November 2024.

Additional information form

The second level of compliance introduced as part of HMRC's new rules for making R&D tax claims is the additional information form.  With effect from 1 August 2023, you must complete and submit an additional information form to HMRC in support of all your claims for Research and Development (R&D) tax relief or expenditure credit.

A key point to mention is that you will need to submit an additional information form before you submit your company’s Corporation Tax Return. Failure to do so will potentially result in any R&D claim being removed from your corporation tax return by HMRC.

You can submit the additional information form before 1 August 2023 if you want to give HMRC more information.

As with the claim notification form, the additional information form can be submitted either by a company representative (e.g. director) or an adviser who has been appointed by the company. You'll also need to provide the following details on the form:

  • Your company's Unique Taxpayer Reference (this must match the one shown on your Company Tax Return), PAYE reference number and VAT registration. Additionally you'll need to describe the nature of your business and we would also suggest including your company's current SIC code.
  • The contact details of the main senior internal R&D contact in the company who is responsible for the R&D claim, plus any adviser involved in the R&D claim.
  • The accounting period start and end date for which you’re claiming the tax relief, this must match the one shown on your Company Tax Return.
  • Full details of the qualifying expenditure you are claiming tax relief on as an SME, or expenditure credit as a large company or SME. 
  • The number of all the projects that you’re claiming for in the accounting period and their details. If this is for 1 to 3 projects, you need to describe all the projects you’re claiming for that cover 100% of the qualifying expenditure. For 4 to 10 projects, you need to describe those projects that account for at least 50% of the total expenditure, with a minimum of 3 projects described. Lastly for 11 to 100 (or more) projects, you need to describe 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, describe the 10 largest.

HMRC have set out in their guidance, the level of detail they require when describing each of the relevant R&D projects.

The additional information form can also be submitted via your Government Gateway account (using your email and password) or via email.

It's important to make sure all the information is accurate and complete to avoid any delays or issues with your claim. We would also suggest that ideally you want to be working with a highly IT literate accountancy firm who have very effective systems and procedures. This will hopefully ensure that any R&D tax claim is processed expediently by HMRC.

For more useful information, check out our Ebooks here.

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