In an effort to address abuse and non-compliance of the R&D tax relief scheme, HMRC has introduced new claim notification and additional information forms. These forms apply to all claim types, including SME, RDEC and hybrid.
Both forms went live for accounting periods starting on or after 1 April 2023, but the additional information form won’t be formally accepted until 1 August 2023 – forms submitted before then can be done on a voluntary basis. There are a number of conditions to consider before each form is submitted, so for further information, it is wise to check HMRC’s guidance.
From 1 April, 2023, claimants will now be required to submit an Additional Information form, which will need to be sent to HMRC ahead of a Corporate Tax Return. Many businesses writing compliant claims, including those that are using Novel, are already providing a lot of the information that will be required for the Additional Form. The only difference is previously it was not a legal requirement to provide supporting information, such as descriptions of R&D projects, as part of your tax relief claim but now it will be.
The questions on the additional information form include:
In terms of descriptions of projects, if you are claiming between 1 to 3 projects, you will need to describe all projects covering 100% of the qualifying expenditure. If you’re claiming 4 to 10 projects, then you need to describe at least 3 projects that make up 50% of the total expenditure. Lastly, if you’re claiming for 10 to 100 plus projects, a minimum of 3 projects need to be described that make up 50% of the total expenditure but if the qualifying expenditure is split across multiple smaller projects, describe the 10 largest.
There will also be an inclusion of a new section called Qualifying Indirect Activities (QIAs), where you will be able to list activities that are indirectly part of the R&D activity, such as attending meetings to discuss the progress of a project.
For a complete list of the information that a business will need to provide, click here.
Overall, the additional information form is a comprehensive look at the company’s R&D projects but also has new questions that specifically relate to the company submitting the claim and any agents involved. The addition of these sorts of questions is a way for HMRC to add more accountability for both businesses and agents within the industry and to trace patterns between organisations who continually abuse the scheme.
Addressing errors and fraud within the R&D tax relief scheme influenced a large majority of the above changes. Although many of these changes will not adversely affect businesses that are already writing compliant claims, apart from an additional administrative burden, the introduction of the pre-notification period will require businesses to be a lot more mindful of how they conduct their R&D activities.