Today HMRC’s Additional Information Form becomes mandatory for all R&D claims
From today, HM Revenue and Customs (HMRC) has made it mandatory for all businesses claiming Research and Development (R&D) tax relief or expenditure credit to submit an additional information form.
Nigel Holmes, director of tax, Catax, a Ryan company, explains why this change is needed and what businesses need to do to complete a claim.
Why is this change needed?
While this new step requires more administrative work, it is necessary so that HMRC can more easily identify fraud and error in claims. The additional information should help to sift out dishonest advisors who—until 8 August—haven’t included sufficient project information.
This change will also enable HMRC to have a better overall understanding of the claims being made. By having access to clear claim breakdowns and project justifications, rather than just total qualifying expenditure, HMRC can tackle claims with particular features or from particular sectors.
What additional information is needed?
Before the change, the provision of project information and cost analysis was recommended but optional. Now HMRC makes it mandatory for firms to include the following before submitting their Corporation Tax return:
- Project details – the scientific or technological advances, uncertainties, baseline, and activities undertaken.
- Project costs, including details of qualifying indirect activities.
How should businesses prepare for the new form?
- Maintain robust recordkeeping – Businesses should be able to discuss all expenditure on a project-by-project basis rather than an overall collective. By having project information captured and readily available, firms will be able to complete the form more easily.
- Start the process early – The new claims process is more demanding and therefore more time consuming. Avoiding last-minute rush can prevent firms from making silly and costly mistakes. If you are using an advisor to complete your claim, consider the time needed to provide them with more information—more calls and email exchange may be needed.
- Consider speaking to an R&D specialist – Some advisors may have made only a handful of claims before, without an accompanying report or comprehensive narrative that’s now expected from HMRC. Consider outsourcing your R&D tax relief claims to a specialist advisor that’s experienced in delivering this level of information to HMRC and already set up to deliver this change.
Holmes adds: “Businesses need to know that regardless of when the accounting period was, all claims submitted from today need to submit the additional information form to HMRC.”
