Understanding the New HMRC Requirements for R&D Tax Credits (2023)

Steve Livingston -

Recent changes to the R&D tax credit application process mean that you need to be aware of new requirements to ensure your claim is valid.

The Additional Information Form (AIF)

As of 8 August 2023, HMRC has introduced a new requirement for companies claiming R&D tax credits. Now, all claims must be accompanied by an Additional Information Form (AIF). This form provides HMRC with more detailed information about your R&D activities and the costs associated with them.

Despite the clear communication from HMRC, a significant number of companies have failed to include the AIF in their claims.

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In fact, almost half of all R&D tax relief claims received by HMRC between 8 August and 3 September 2023 did not include the required AIF!

As a result, these claims were not valid and were removed from the relevant company tax return.

The Importance of the AIF for R&D Tax Credits

The introduction of the AIF is a crucial change in the R&D tax credits application process. Without this form, your claim will not be considered valid by HMRC. This means that even if your company has undertaken qualifying R&D activities and incurred eligible costs, you will not receive the tax relief you are entitled to without the AIF. You might even miss the relevant filing window...

While the introduction of the AIF may seem like an additional hurdle in the R&D tax credits application process, it's important to understand how to navigate these new requirements.

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If you're making a Research and Development Expenditure Credit (RDEC) claim, you may (at the time of writing this post) encounter an error with boxes 655 and 657 on your company tax return. HMRC advises not to make entries in these boxes if you're making an RDEC claim. Instead, you should include information in the white space that an R&D claim is being made and that the AIF has been completed

Conclusion

The R&D tax credits scheme is a valuable source of funding for innovative companies in the UK. However, the recent changes to the application process mean that companies need to be aware of the new requirements to ensure their claims are valid. By understanding the importance of the AIF and how to navigate the new requirements, your company can continue to benefit from the R&D tax credits scheme.

Remember, staying informed and compliant with HMRC's requirements is key to maximising your R&D tax credits claim.

Photo by Jonas Jacobsson / Unsplash