We are all too familiar with the frequent changes to the R&D tax relief scheme and having to plan to accommodate the impact of these changes on our businesses.
As part of these changes, you will be aware that from April this year, if a company wants to apply for R&D tax relief and hasn't made a claim in the last three years, they must notify their intention to claim within six months after the period-end they are planning to submit a claim for. However, you may have missed the mandatory requirement for digitally submitting additional information supporting all R&D tax relief claims starting from August this year.
Extra requirement #1: company details
The additional information required is aimed at ensuring compliance and aiding the administration of claims by HMRC staff. A request that all submissions include the claiming company’s Unique Tax reference, VAT registration number, and Employer’s PAYE, along with:
- A named senior company contact, responsible for the R&D claim, AND
- The details of any agent involved in the preparation of the claim.
Extra requirement #2: Number of projects
These details in themselves won’t cause claiming companies any serious concern but the request also stipulates how many projects claimants should report on:
- For those companies claiming for up to three projects, the claimant must write up all projects.
- For those claiming for four or more projects, they will need to write a minimum of 3 projects but must write up as many projects as accounts for 50% of expenditure, or the ten largest where the costs are spread across multiple small projects.
Extra requirement #3: Detailed project descriptions
The drive is for detailed descriptions of the R&D work carried out to establish eligibility for relief, covering:
- The main field of science or technology being investigated.
- The baseline level of knowledge/understanding the company planned to advance.
- The advance being planned.
- The technical uncertainties addressed.
- How did the company seek to resolve these uncertainties.
- What work packages the company is claiming relief for and how much is being claimed.
Extra requirement #4: Detailed breakdown of costs
Furthermore, HMRC is insisting on more detailed breakdowns of costs across qualifying categories, such as: consumables, direct staffing, externally provided workers, subcontractor costs, and software. The main thrust of this request is that some companies will be required to show a level of detail to their eligible spend they may not have provided in the past.
While for those companies already using a specialist provider these additional requirements are unlikely to represent much of a barrier, for those SMEs not currently claiming or preparing claims themselves, these could be sufficient enough obstacles to deter companies from accessing this valuable incentive.
If you would like to know more about these changes or how they will impact on your R&D tax relief claim, our innovation funding partner Visiativ would be happy to answer your questions.
In the UK Visiativ has been managing R&D claims for 15 years. They can support you through these changes – with advice and guidance, or by managing part, or all, of the process. For more information please call Sandy Findlay on 07807 739033 or email [email protected]