R&D tax credits are a great way for UK businesses to reduce their corporation tax liability in return for investing into research and innovation. This is either as a reduction in their Corporation Tax bill or as a cash lump sum if the company doesn’t turn a profit.
HMRC recently published draft tax legislation to amend the R&D tax reliefs regime, in an attempt to stop abuse through improved compliance. There are a few surprises in the details released, the changes are due to come into effect for accounting periods beginning on or after 1 April 2023, so businesses now have little time to prepare and onboard.
One of the main updates to be aware of is the claim notification.
Claim Notification
For accounting periods starting on or after 1 April 2023 some businesses will need to submit a Claim Notification form for their R&D claim to be valid. This will need to be submitted within 6 months after the period end.
Businesses that need to supply a Claim Notification are:
- First-time R&D claimants
- R&D claimants who have not made an R&D claim in any of the previous 3 financial periods.
If your business submits an R&D claim before the 6-month Claim Notification deadline then you will not need to submit the Claim Notification.
Information that will be required for the form:
- The Unique Tax Reference (UTR) number of the company – this must be correct and correlate with that on your CT600
- Contact details of main internal R&D contact at the company – this is the person from the business responsible for the claim, for example, a Company Director
- Contact details of any agent involved in the R&D claim
- Agent reference number (if you have one)
- Period of account start and end dates which must correlate with your tax computations
- Accounting period start and end dates of the accounting period claiming R&D for only – again, this must be correct and align with that on the CT600
- A summary of the high-level planned activities, for example, if you’ve developed software what it will be used for to show that the project meets the standard definition of R&D.
If you do not notify HMRC when you are required to, and you submit your company’s Corporation Tax Return, HMRC will remove your claim for R&D tax relief.
