In the Spring Budget this year a number of significant changes were made to the R&D tax credit system. Recently further guidance was provided on how these changes will work.
A key change was the introduction of the Additional Information Form which is required for ALL R&D claims submitted after 1 August 2023. The form requires significantly more information in respect of the R&D claim:
- Business details (including VAT number and PAYE ref)
- Agent details
- Name of senior officer at company endorsing claim – this is a key new piece of compliance
- Qualifying expenditure (including split of Qualifying Indirect Activities)
- Project information (including Qualifying Expenditure (QE)):
- 1 – 3 projects: describe all projects covering 100% of QE
- 4 – 10 projects: describe projects that account for 50% of total QE, with a minimum of 3 projects being described
- 11 – 100+ projects: describe projects that account for 50% of total expenditure with minimum of 3 projects being described. But if expenditure is split across multiple smaller projects, describe the 10 largest.
This means full descriptions of the R&D activity must be submitted detailing the activity that is being undertaken from 1 August 2023, otherwise the claim will be rejected.
Another new compliance requirement is the requirement to notify all first time claims ahead of submission using the new Claim Notification form. The key points of this new rule are:
Companies must submit a Claim Notification Form for R&D claim to be valid.
This notification is required if:
- claiming for the first time; [OR]
- claimed for the previous accounting period, but the claim was not submitted until after the last date of the claim notification period (the claim notification period ends 6 months after the end of the period of account); [OR]
- the previous claim was made more than 3 years before the last date of the claim notification period (see below).
This new compliance requirement applies for accounting periods beginning on or after 1 April 2023. It would therefore be wise for to submit R&D claims within 6 months of end of accounting period moving forwards.
Time limits for filing the Claim Notification -
- The earliest date that a Claim Notification form can be submitted is on the first day of the accounting period to which the claim relates.
- The latest date that the Claim notification form can be submitted is 6 months after the end of the accounting period to which the claim relates.
If that deadline is missed, then any future R&D claims for that accounting period will be invalid.
jgray@critchleys.co.uk