To help tackle abuse of Research & Development (R&D) tax relief, the Government is introducing several new requirements for claims. Compliance measures will include mandating digital claims, provision of additional information and pre-notification of claims.
The measures are expected to have significant business impact on around 90,000 businesses claiming R&D tax reliefs.
These new measures will apply for accounting periods beginning on or after 1 April 2023.
Mandating digital claims
New legislation will require that all Corporation Tax returns that contain an R&D claim, including amended returns, must be submitted digitally through HMRC’s tax return portal.
Provision of additional information in the claim
From April 2023, additional information will also be required to be provided in relation to any R&D claim. This will include:
- A description of the R&D undertaken;
- A breakdown of qualifying costs;
- Details of any agent that has advised on the R&D claim; and
- Endorsement from a senior officer of the company.
Pre-notification of claims
Companies will be required to make a claim notification to HMRC. Notifications will need to be made, using a digital service, within six months of the end of the period to which the claim relates.
If a company has claimed in one of the three preceding periods, they will not need to pre-notify.
Additional changes to the scheme
In addition to the measures outlined above, the Government is also:
- Extending the scope of qualifying expenditures to the R&D scheme to include the costs of datasets and of cloud computing;
- Including pure mathematics in the definition of R&D for tax relief, after previously being excluded from the scheme;
- Refocusing relief towards innovation in the UK, with relief for subcontracted work and the cost of externally provided workers limited to focus on UK activity; and
- Amending the time limit for making a claim to two years from the end of the period of account to which they relate, rather than twelve months from the statutory filing date.
For any enquiries on making a claim for R&D tax relief, please get in touch with your usual M+A Partners contact or email enquiries@mapartners.co.uk
Visit our Research and Development page for a series of helpful factsheets on the various types of R&D relief available to companies.