Changes to R&D tax reliefs announced April 2023

It seems that R&D has been a bit of a rollercoaster ride over the past year or so, but one thing is for certain – in a bid to rid themselves of spurious claims HMRC is making it increasingly complex to submit a successful claim. In the following article we highlight the latest round of changes.

Additional form required from August 23

Did you know that for all claims submitted from 1 August 2023 it will be necessary to submit an additional information form before submitting the claim on the tax return? If the form is not submitted before the company’s tax return, HMRC will remove the claim from the return. HMRC has released the details of what needs to be included here: www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief.

Reporting on a project basis

This change is likely to have a big impact on businesses preparing claims in-house and who currently aren’t documenting their projects in detail, as HMRC has stipulated the information they want submitted to evidence the R&D which is likely to lead to additional work for many businesses. Businesses will need to be able to allocate costs on a project basis to complete the form as there are guidelines as to the number of projects to be documented (a minimum of 3 projects or all projects if less) which are based on at least 50% of qualifying expenditure being documented. This also means companies need to state how much qualifying expenditure there is for each documented project. Many businesses currently prepare their claims based on allocating R&D percentages to staff and don’t track costs at a project level at all so should start to think now about how they might capture costs at a project level.

Businesses will also have to nominate a senior officer who is responsible for the R&D claim and whose details will have to be included on the form.

How can Wilson Partners help?

Capturing costs at a project level might sound somewhat overwhelming, but with the right process in place it can be greatly simplified and ease the R&D process. We can help you capture time and costs on a project basis meaning that when it comes to submitting your claim, a large chunk of the work will already be done. We also find that this can help to increase the overall claim size as work and costs are captured in real time meaning development activity is not forgotten about when trying to remember what you were doing a year ago!

Claim Notification form 6 month deadline introduced

Another key change is the introduction of a claim notification form – businesses wanting to make R&D claims for accounting periods beginning on or after 1 April 2023 must notify HMRC in the following circumstances:

• Where a company is making their first R&D claim
• If they have claimed R&D in the previous tax year but the claim wasn’t submitted until after the last date of the claim notification period (i.e., 6 months after the end of the period of account)
• The company’s last claim was made more than 3 years before the last date of the claim notification period.

The latest the claim notification form can be submitted is 6 months after the end of the period of account that the claim relates to – if the form is not submitted by this deadline the R&D claim will not be valid.

There is less information to be submitted on the claim notification form but it still requires the company to name the senior officer responsible for the R&D claim, details of any agent used and a summary of the planned R&D activities showing how they meet the definition of R&D. The guidance on what is needed is here: www.gov.uk/guidance/tell-hmrc-that-youre-planning-to-claim-research-and-development-rd-tax-relief.

How can Wilson Partners help?

Much like submitting a tax return, or your annual company accounts – we have the brain power, experience and resource to ensure your forms are completed accurately and filed within the deadline. We can remove the headache and ensure you have the best chance of making a successful claim.

Talk to us today to find out more.