How would you make an R&D claim under the Merged Scheme?

A claim under the R&D Merged Scheme is made through the company’s Corporation Tax return. Before submitting the claim, the company needs to identify its qualifying R&D projects, determine which activities meet the definition of R&D for tax purposes and calculate the qualifying expenditure associated with those activities.

The company must also submit an Additional Information Form (AIF) to HMRC. This provides information about the R&D projects included in the claim, including the scientific or technological advances being sought, the uncertainties encountered and the qualifying expenditure being claimed. The AIF must be submitted before the Company Tax Return containing the R&D claim.

Some companies must also submit a Claim Notification Form (CNF) before making an R&D claim. This can apply to first-time claimants and companies that have not made a qualifying R&D claim within HMRC’s specified three-year period. The notification generally needs to be submitted within six months of the end of the relevant accounting period. Companies should check whether the notification requirement applies before submitting their claim, as failure to notify HMRC within the required period will result in the claim being rejected.

Once the relevant requirements have been completed, the R&D expenditure credit is claimed through the Company Tax Return. Under the Merged Scheme, the standard expenditure credit is calculated at 20% of qualifying R&D expenditure. The credit is taxable and is then dealt with through a series of steps that determine how it is used against the company’s tax liabilities or whether an amount can be paid to the company.

Loss-making SMEs that meet the R&D intensity condition and the other ERIS requirements may have another option. An eligible company can choose to claim under either ERIS or the Merged Scheme, but it cannot claim under both schemes for the same expenditure.