Many changes to the R&D tax regimes are underway and further guidance has emerged from HMRC regarding the new compulsory additional information form.
Every claim submitted on or after 1 August 2023 must be accompanied by the submission of an additional information form, providing HMRC with details of the claim. You can view the full guidance here
Some of the information required is very much as you’d expect. Things like the Unique Tax Reference (UTR) number of the company, employer PAYE Reference number, the accounting period start and end dates and a breakdown of qualifying costs being claimed. It’s very much a case of HMRC wanting the information all in one place.
However, they also ask for contact details of the person at the company responsible for the R&D tax claim and the name of any agent or advisor involved in compiling the claim. Doesn’t take a rocket scientist to work out what they’re doing there.
There are also some areas that will require additional effort. One area being the need to write up a prescribed number of detailed descriptions of the R&D projects claimed, depending upon the amount of the claim each project represents.
- If claiming 1-3 projects then you need to describe all projects being claimed covering 100% of the qualifying expenditure
- If claiming 4-10 projects then you need to describe a minimum of 3 projects which cover at least 50% of the qualifying expenditure
- If claiming 11-100 projects, you need to describe a minimum of 3 projects which account for at least 50% of the qualifying expenditure, up to a maximum of 10 projects if the expenditure is spread across many smaller projects.
More than ever it is important to correctly identify qualifying projects and the boundaries of R&D.
When writing up the R&D project descriptions HMRC asks for the information under 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?
The key is being clear and concise in articulating how the project meets the R&D criteria.
Interestingly HMRC also state that the form must be submitted before the tax return and if it isn’t they will write to you to confirm they’ve removed your claim from the return.
We’re talking to clients who we are in the process of preparing R&D claims to ensure they remain compliant with the new form and process. Even if submitting prior to 1 August 2023, the new guidance clearly shows what HMRC are interested in understanding more about your claim.
If you want to know about what the changes in the guidance will mean for your claim get in touch.
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