HMRC’s recent crackdown on non-compliant and potentially fraudulent R&D tax relief claims has been well publicised and whilst the scrutiny is welcomed and deemed necessary by genuine R & D specialists, their methodology is being criticised by many in the tax sector. Several changes have been made over the last few years, including adjustments to qualifying costs, scheme rate changes, and a notable expansion of HMRC’s compliance team and enquiry activity.
One major change relates to the introduction of a new Additional Information Form (AIF) that must be completed and filed digitally for all claims (SME and RDEC) submitted to HMRC from 8th August 2023. The AIF requires taxpayers to supplement their claims with more detailed information for each R&D project, a list of categorised costs and details of indirect qualifying expenditure. The AIF must be submitted through an online portal prior to the submission of a claimant’s corporation tax return.
A little over a month since the launch of the new rule, HMRC reported that nearly 50% of R&D claims they had received since 8th August were not accompanied with the mandatory AIF and were subsequently dismissed as invalid. Whether due to teething problems or poor communication, it is clear that claimants are struggling to comply with the new rules and many businesses risk missing out on vital funds for their legitimate R&D activity.
HMRC will be writing to those companies that have submitted invalid claims to advise how best to submit valid claims in the future. If the company is within the time limit, claimants may amend and resubmit their CT600 return to include an R&D claim, however an AIF must be completed before the amendment is made.
Now more than ever, we recommend consulting an R&D tax specialist to ensure your claims comply with HMRC’s new stringent criteria and are as robust as possible. If you have any questions regarding how the new HMRC regulations might impact your R&D tax relief/credit claims or want to talk directly with a tax professional about how Cost Care Tax can help you, please contact us on 0161 904 0044 or firstname.lastname@example.org.