R&D tax credits claims made easier

You have the flexibility to make an R&D tax credit claim at any stage of the R&D process, not solely at the project's conclusion. As long as there are eligible expenses within the financial year you are claiming for, you can submit the claim. Ongoing projects can be claimed across multiple years or even retrospectively, with a two-year window for making amendments.

All R&D claims must be accompanied by a completed CT600, as well as a full computation. The reason for this is to prevent penalties and, essentially, to reduce the chances of receiving rejections from HMRC.

The R&D tax claim has a time limit of two years from the conclusion of your accounting period. Within this period, you must submit your application for all eligible expenditures identified during that specific timeframe. This is because R&D tax credits fall under Corporation Tax relief, and the usual deadline for amending your Corporation Tax return is 24 months after the conclusion of your accounting period.

It’s natural for R&D projects to take a few years to complete. You cannot reuse as previous R&D tax credit claim. You cannot recycle or reuse a previous research and development (R&D) tax claim. Each claim must be assessed independently, considering the eligibility of your qualifying R&D activities and expenditure. However, if your work is ongoing and continues to address technological or scientific uncertainties, a single project can span multiple years for claiming purposes.

The standard deadlines for filing and amending company tax returns are as follows:

1. The absolute deadline for making R&D tax credit claims is within two years of the accounting period in which the R&D expenditure being claimed is incurred.

2. Profitable companies that are aware of the R&D Tax scheme typically prepare an R&D claim within 9 months and one day of the accounting period end when any tax due needs to be paid. This applies to both SME and RDEC claims, and the claim helps reduce the tax liability.

3. For loss-making companies claiming an R&D Tax Credit or an RDEC payable credit, it is beneficial to submit the claim as soon as possible to improve cash flow.

Your accountants can support your R&D tax claim application, provided their knowledge is up-to-date with how to submit an R&D claim as well as the latest roll out of changes to the rates. R&D tax credits demand a thorough understanding of your industry and the R&D initiative to uncover the complete scope of your claim, and potentially, receive your reward.

The method of receiving your R&D tax credits benefit depends on the specific R&D scheme you use for the R&D claim and your company's financial situation. Your preference may also play a role in the decision.

The benefit can be received in various ways, such as a cash payment, a reduction in Corporation Tax, carrying forward or back an enhanced loss, or a combination of these options.

For accounting periods starting on or after April 1, 2024, non-UK costs (such as certain sub-contractors) will generally no longer qualify, subject to limited exceptions.

Capital expenditures are not eligible for R&D tax credit but may qualify for 100% first-year Research & Development Allowances.