HMRC have, over the past year, significantly increased the volume and intensity of their checks of claims for enhanced R&D tax relief. From 1 August 2023, additional information requirements will come into effect, as a further step in response to concerns at the level of error and fraud in claims, particularly within the SME scheme – where claims can attract a cash payment of up to £33.35 for every £100 of qualifying expenditure (reducing to £18.60 for most SMEs for expenditure incurred from 1 April 2023).
Pre-notification of claims has already been introduced, requiring companies to notify HMRC of any new claims within six months of the end of the period in question (for periods commencing on or after 1 April 2023). The new information requirements, for any claims submitted on or after 1 August, will need to be completed on a dedicated form in advance of the corporation tax return submission, including:
- Basic company identification details (name, registration number, tax references)
- Confirmation of the type of relief being claimed and a breakdown of qualifying expenditure
- A named senior contact within the company with responsibility for the claim
- Details of any agent involved in the claim preparation
- Detailed prescribed information about the projects undertaken
While much of this information will already be included in reports prepared to support claims under the existing arrangements, the change serves further to reinforce HMRC’s compliance activities and to help to reduce potentially spurious claims.
The naming of an internal senior R&D contact can be expected to encourage that individual to ensure that claims are more carefully reviewed to protect their personal reputation; HMRC may be able to use data on agent involvement to target their enquiries towards those with a history of involvement in non-compliance. When providing descriptive project detail, the more detailed questions should provide HMRC with more of the information that they need to assess claim eligibility up-front.
While the new requirements may seem somewhat onerous, DSG’s corporate tax team is experienced in guiding companies through the R&D claim process. We will be happy to assist both new and existing claims to deal with these new requirements with as little disruption as possible, or to have a discussion up-front to discuss and identify potential eligibility before proceeding with a claim in detail.