What is happening?
HMRC have introduced new rules for the submission of R&D tax relief claims.
When is this happening?
From 8 August 2023.
This is with reference to the date the claim is filed, not the accounting period date, so any claims filed from 8 August 2023 onwards will need to comply with these new rules.
Why is this happening?
While the UK Government recognises the role of R&D in driving economic growth through innovation, they have become increasingly concerned with the cost to the treasury of R&D tax reliefs. Rising levels of fraudulent and spurious R&D claims have promoted the government to introduce changes to the rules, including reductions to rates, enhanced compliance and increased scrutiny.
What are the changes to making R&D tax relief claims?
Companies submitting R&D claims will now have to complete an online submission, in addition to the disclosure included in the corporation tax return and associated computations. This online submission will be required by all companies making R&D claims, in a prescribed format, as detailed below:
Historically, there was no requirement to prepare an R&D report or supporting narrative but all submissions will now need to include the following information in relation to the R&D projects:
- What is the main field of science or technology?
- What was the baseline level of science or technology that the company planned to advance?
- What advance in that scientific or technological knowledge did the company aim to achieve?
- The scientific or technological uncertainties that the company faced.
- How did your project seek to overcome these uncertainties?
- Which tax relief you’re claiming for and the amount?
The above details will need to be provided for a number of projects, this number will be determined with reference to the following:
- 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.
- 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 and if the qualifying expenditure is split across multiple smaller projects, describe the 10 largest.
Qualifying R&D expenditure will need to be broken down for each of the projects by qualifying category, including the following:
- Staffing costs
- Subcontractor costs
- Externally Provided Workers
- Consumables
- Software
- Data licence costs (for accounting period beginning on or after 1 April 2023)
- Cloud computing costs (for accounting period beginning on or after 1 April 2023)
The following information will also need to be submitted:
- Unique Taxpayer Reference (UTR)
- Employer PAYE reference number
- VAT registration number
- Business type, for example your current SIC (Standard Industrial Classification) code
- The contact details of:
The contact details of:
- The main senior internal R&D contact in the company who is responsible for the R&D claim, for example a company director
- Any agent involved in the R&D claim
For more information on the new R&D submission rules please get in contact with Anthony Lalsing or complete the below form and our R&D specialists will get back to you: