The R&D Tax Credits regime has changed as of August 2023 and it is important that companies looking to claim are aware of how this will impact them.
For all claims submitted on or after August 2023, an additional information form must first be submitted, with the aim to provide HMRC with details of the claim. HMRC have advised that submission of the form must take place before the tax return submission, and if it isn’t they will remove your R&D claim from the return.
Much of the information required is as expected and is there to ensure that HMRC have all the required information in a standardised format that is easy to check. This basic information includes the following:
- Unique Tax Reference (UTR) number of the company
- Employer PAYE Reference number
- Accounting period start and end dates
- Qualifying costs breakdown
- Contact details of the person at the company responsible for the R&D tax claim
- Name of any agent or advisor that helped prepare the claim.
As you can see, HMRC are placing a lot more emphasis on who is ultimately responsible for the information contained in the R&D claim submission. The aim being to dissuade businesses from accessing the scheme where genuine R&D has not taken place.
There are some additional requirements that may require additional effort, albeit many businesses will already be providing such information in claims submitted up to this point. One such requirement is to to write up a prescribed number of detailed descriptions of the R&D projects claimed, which is dependent upon the specifics of each claim/project.
- Where businesses are claiming for 1-3 projects then all projects being claimed for must be reported, essentially covering 100% of the qualifying expenditure
- Where businesses are claiming for 4-10 projects, a minimum of 3 projects must be reported, with coverage of at least 50% of the qualifying expenditure
- Where businesses are claiming for 11-100 projects, a minimum of 3 projects (accounting for at least 50% of the qualifying expenditure) must be reported, up to a maximum of 10 projects if the expenditure is spread across numerous small projects.
In terms of writing up the R&D project reports, HMRC have summarised this requirement under the below 5 headings:
- What is the main field of science or technology?
- What was the baseline level of science or technology that you planned to advance?
- What advance in that scientific or technical knowledge did you aim to achieve?
- What scientific or technological uncertainties did you face?
- How did your project seek to overcome these uncertainties?
Full guidance of the additional information form is available here
We recommend clients familiarise themselves with the new requirements and ensure that any claims address the areas that HMRC have identified.
As always, the key with the technical report is to be clear and concise in articulating how the project meets the R&D criteria, which is where engaging a specialist R&D advisor will bring significant benefits. Additionally, they will be integral in helping to identify the boundaries of R&D, with HMRC clearly placing increased emphasis on this.
If if you want to find out more, then reach out to a member of the team to discuss.