R&DClaims
R&D TAX RELIEFS
Additional information for R&D claims
HMRC requires additional information and qualifying expenditure for R&D claims as of 8 August 2023, reports Santhie Goundar
At a glance
HMRC is tightening the rules around R&D tax reliefs to reduce risk of fraud and error
Businesses hoping to claim R&D tax relief will have to provide more information
From 8 August 2023, additional information forms need to be completed and sent to HMRC when claiming research & development (R&D) tax reliefs or expenditure credits. This form needs to be submitted to HMRC to support a company’s R&D claim before its corporation tax return.
Previously, the provision of project information and cost analysis was recommended, but optional. HMRC is now making the provision of certain information mandatory so that it can more easily identify fraud and error in R&D claims.
HMRC requires the following information:
• company’s unique taxpayer reference,
• VAT registration number,
• employer PAYE number,
• business type,
• accounting period start and end dates,
• contact details of the person responsible for the R&D claim, and
• details of the qualifying expenditure.
If conditions are met, a company can claim for either tax relief as a SME, or R&D expenditure credit (RDEC) as a large company or SME, or both.
What is qualifying expenditure?
Businesses claiming for SME R&D tax relief can claim for the following:
• cloud computing costs, including storage, for accounting periods beginning on or after 1 April 2023,
• consumable items, for example materials, water, fuel and power,
• data licence costs, for accounting periods beginning on or after 1 April 2023,
• payments to clinical trial participants,
• software,
• staff,
• externally-provided workers,
• subcontractor costs.
Businesses claiming for the R&D expenditure credit (RDEC) may claim for all the above, as well as contributions to independent R&D costs and some subcontractor costs.
“An implementation date of April 2024 for R&D tax relief reform is overambitious."
David O'Keeffe, R&D working group chair, CIOT
QUALIFYING INDIRECT ACTIVITIES
Understanding indirect activities
Qualifying "indirect activities” are activities which form part of a project but do not directly contribute to the resolution of the scientific or technological uncertainty, and can also be claimed.
Businesses can include qualifying expenditure detailed in the section “Qualifying expenditure details”, if it was incurred on the following qualifying indirect activities:
• scientific and technical information services conducted for the purpose of R&D support,
• indirect supporting activities such as maintenance, security, administration and clerical activities, finance and personnel activities,
• ancillary activities essential to the undertaking of R&D, e.g. taking on and paying staff, leasing laboratories and maintaining equipment/computers used for R&D purposes,
• training required to directly support an R&D project,
• research by university students and researchers,
• research for new scientific or technological testing, survey or sampling methods, where this research is not R&D in its own right,
• feasibility studies to inform the strategic direction of a specific R&D activity.
R&D TAX RELIEFS