For all R&D claims submitted from 8 August 2023, companies will be required to submit an additional information form to HMRC. This will be a significant additional requirement for all companies claiming R&D tax relief and the form must be submitted before filing the company tax return, otherwise the R&D claim will be removed from the tax return.
The additional information form may also be submitted before 8 August 2023 for companies who wish to give HMRC more information on their projects and costs being claimed. The form can be completed by the company itself via its Government Gateway account or an agent acting on behalf of the company who is registered with an agent services account.
What details are included in the additional information form?
The form must include the company’s:
- Unique taxpayer reference (UTR)
- Employer PAYE reference number
- VAT registration number
- Standard industrial classification (SIC) code
Contact details for the main senior R&D contact at the company, e.g. a director, and any agent involved in the R&D claim must be given. Also, the accounting period start and end date for which the claim is being made must be stated.
Qualifying expenditure details
The company must also include details of the qualifying expenditure included in the claim. This may include:
- Staff costs
- Consumables, such as materials or utilities
- Subcontractor costs
- Externally provided workers
- Payments to participants of a clinical trial
- Contributions to independent R&D costs (RDEC only)
- Cloud computing costs, including storage (accounting periods beginning on or after 1 April 2023 only)
- Data licence costs (accounting periods beginning on or after 1 April 2023 only)
In addition, the company should separately include the amount of qualifying indirect activities (those that do not directly lead to resolving the uncertainty) for each project.
The company must include the number of projects being claimed and a description of the key projects included in the claim. The number of project descriptions required depends on the number of R&D projects being claimed.
- For 1 to 3 projects, the company must describe all of the projects being claimed and covering 100% of the qualifying expenditure.
- For 4 to 10 projects, the company must describe those projects that account for at least 50% of the total expenditure, with a minimum of 3 projects described.
- For 11 or more projects, the company must provide details covering at least 50% of qualifying expenditure, with a minimum of 3 projects to be declared. If expenditure covers multiple smaller projects, descriptions for the 10 largest should be included.
For the relevant number of projects above, the company must confirm which tax relief (SME or RDEC, or both) the company is claiming and answer the following questions for each project.
- 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 are claiming and the amount of qualifying expenditure for the project.
Can any further information be provided to support the R&D claim?
Yes, it is still possible to submit further detail to HMRC via a supporting report or other relevant attachments to the company tax return in addition to the above. HMRC have previously advised that submitting additional information to support an R&D claim, such as a narrative report, will help them to process claims quicker. In many cases, it could also mitigate the risk of HMRC enquiry where queries might be raised due to lack of detail.
For example, a supporting report may include relevant background to the company, analysis of the basis of the claim, the methodology used in identifying the qualifying R&D expenditure, details of the key competent professionals from the company and possibly images of the R&D activities if not easily explainable in writing.
This post was written by Gemma Thake, a Tax Partner within Price Bailey. We have extensive experience with R&D tax relief and supporting clients with making R&D claims. If you have any questions on the above or related to making a claim, you can contact a member of the Tax team 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.
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