In December 2020, HMRC quietly released a draft supplementary form (CT600L) to be completed by all companies claiming R&D tax relief from 1 April 2021. The form has now been finalised and published on HMRC’s website.
What is the CT600L?
The CT600L is a four page supplementary form that should be submitted with a company’s corporation tax return when making an R&D claim. The form applies to all companies making claims under the small and medium-sized enterprise (SME) or R&D Expenditure Credit (RDEC) schemes from 1 April 2021, regardless of the accounting period.
There will still be a few boxes included on the main corporation tax return (CT600) which require limited disclosure of qualifying expenditure and tax credits claimed, however, the new supplementary pages require significantly more detail than previously.
Why has it been introduced?
It appears that the main reason for the CT600L is to reduce fraudulent claims. Whilst R&D tax relief is highly attractive and widely used by innovative companies, the generous rates of relief also leave the regime exposed to abuse. It is hoped that the additional detail required will deter some false claims and ensure more claims are being calculated correctly.
Companies making valid claims may also find the additional disclosure speeds up the processing time of R&D tax credits, which can be delayed where insufficient information has been provided with the original filing and sometimes results in HMRC raising an enquiry.
The disclosure required for R&D claims on the main corporation tax return has historically been limited to a few boxes, whereas the new CT600L requires much more numerical detail, in particular for companies claiming under the RDEC scheme.
The first page of the CT600L is limited to administrative detail about the claimant company, which should be pulled through from the main return. The next two pages are relevant for companies making an RDEC claim, setting out the seven steps of the tax credit calculation and summarising any amounts carried forward or surrendered. The final page of the return is applicable to SME and RDEC claims and summarises the amount of credit and how it should be used if there are other tax liabilities.
Companies should familiarise themselves with the additional disclosure required on the CT600L to ensure that they are keeping sufficient records to be able to provide the necessary information for their R&D claim to their advisers and, ultimately, HMRC.
Advisers will also need to review the detail obtained from clients to ensure that they are able to complete the additional disclosure required. It may also be necessary to confirm that any software used for preparation of returns is up to date.
This post was written by Gemma Thake, Senior Tax Manager. Price Bailey has extensive experience with R&D tax relief. If you have any questions on the CT600L pages or related to making an R&D claim, you can contact Gemma using the form below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.