UK: Make Sure You're Prepared For Compliance Changes Affecting R&D Incentives – Beat The Deadline And Submit Your Claims Now

HMRC is changing the submission and reporting requirements for all R&D tax relief (R&DTR) claims submitted from 8 August 2023 onwards – increasing the compliance burden and information companies need to provide to support claims.

Mandatory Additional Information Form (AIF) for all claims submitted from 8 August 2023

The government's primary justification for the additional requirements is to reduce false claims and abuse of the scheme, hence the new rules require submission of an Additional Information Form (AIF) via HMRC's online portal, prior to the submission of the company's corporation tax return – if this is not submitted prior to the tax return HMRC will remove the R&DTR claim from the tax return.

• The contact details of the main internal R&D contact at the company who is responsible for the R&DTR claim as well as details of external agents involved in the R&D claim needs to be provided.
• Detailed project information is required, with the number of projects that need to be included varying based on the total number of qualifying projects being claimed and their size.
• Each project must include information on the field of science or technology, the baseline level of knowledge, the advance in scientific or technological knowledge and associated uncertainties faced, work done to overcome the uncertainties and the type of tax relief you are claiming and the amount.
• The qualifying R&D expenditure needs to be broken down by project – this has not been an essential requirement in the past and will require granular financial analysis on a project-by-project basis.

Pre-notification requirements for 'new' R&DTR claimants

Companies with accounting periods starting on or before 1 April 2023 must pre-notify HMRC that they are intending to claim R&D Tax Relief if the company:

• Is claiming for the first time
• Hasn't claimed in the last three accounting periods before the last date of the claim notification period
• Has claimed for the previous tax year, but did not submit that claim until after the last date of the claim notification period (the claim notification period ends 6 months after the accounting period end date)

If you need to pre-notify HMRC that you're planning to claim Research and Development (R&D) tax relief, you need to complete and submit the claim notification form.

Gerald Edelman's advice

Submit your current claim before 8 August 2023 if possible – With the new compliance requirements only a few weeks away, if you have used your previous claim methodology, we advise you submit your claim and supporting evidence before the new requirements come into play to the avoid extra work involved.

Check the boxes on the CT600 – submitting the pre-notification and additional forms is the first step, once this is done make sure to check the right box in the company tax return to verify you've submitted the required forms (boxes 656 and 657).

Use a detailed R&D report to further support your claim – we recommend that you continue to submit detailed R&D reports alongside the AIF, to show HMRC that a robust claim methodology was used to prepare your claim and reduce the risk of an enquiry.