The Research and Development Expenditure Credit (RDEC) offers a valuable tax incentive for UK companies investing in innovation. While understanding the qualifying criteria is crucial, navigating the administrative process can be equally important. This short video and detailed article provide a practical overview of the steps involved in making an RDEC claim, focusing on the essential paperwork and online submissions.
Submitting the R&D Additional Information Form: This online form provides HMRC with detailed information about your R&D projects.
Completing the Company Tax Return (CT600): This is the core document for reporting your company's financial activities usually submitted by your external accountant. It has fields for making an RDEC claim.
However, it is worth noting that before you can make an R&D claim you need to have complied with the HMRC R&D Notification Requirement.
The R&D Additional Information Form (AIF)
The Additional Information Form is a vital part of your RDEC claim. It provides HMRC with the necessary details to assess the validity of your R&D activities.
It must be submitted before you submit your company tax return (CT600) with the RDEC claim included, or on the same day). The claim can be included in the original or an amended tax return. The deadline for an amended retrun is two years of the end of the relevant period of account (i.e. the period that covers the R&D expenditure being claimed).
Here's a breakdown of what's involved in completing the AIF:
Accessing the Form: This form is submitted online through your HMRC company portal. You'll need your company's Government Gateway credentials.
Company details: You will need provide company details such as the limited company name, registration nubmer, unique tax reference, payroll reference and vat registration number.
Project Details: You'll be required to provide a clear and concise description of your largest R&D projects. This should include:
Description of the industry baseline so your R&D can be measured.
The scientific or technological advance you are seeking.
The uncertainties faced in seeking the advance.
The specific R&D activities undertaken.
The start and end dates of the projects.
Expenditure Breakdown: You’ll need to provide a detailed breakdown of the qualifying R&D expenditure per project and per the following cost headings.
Internal staff costs (salaries, NIC, pension contributions) - divided between direct R&D staff and supporting R&D staff.
Costs of Externally Provided Workers (EPWs),
Payments to Contractors.
Consumable items used, including energy.
Software, data and hosting costs – needed for your R&D.
Payments to subjects of clinical trials.
Supporting Documentation: While you cannot upload additional information when completing the online AIF you can provide additional information with your tax return submission. This is a good idea for large or complex claims.
Clarity and Consistency: Ensure the information provided in the Additional Information Form aligns with the figures reported by your accountant in your CT600 tax return. Accuracy in completing the AIF is essential, any errors in the general data about the company or any mismatch between figures and dates in the AIF and those in your tax return will lead to automatic rejection of your RDEC claim.
HMRC often follows up on the submission of an R&D AIF form with a standard letter to confirm receipt of your R&D claim forms. The letter provided links to R&D guidelines and outlines what to expect next, including that your submission has been logged and will be reviewed, but that this doesn’t indicate the claim has been accepted. It also notes that HMRC may contact you for further information during their review process.
Maintain Thorough Records: Good record-keeping is essential. Keep detailed records of all R&D activities and expenditure.
Plan Ahead: Start gathering the necessary information well in advance of the filing deadline.
Seek Professional Advice: If you're unsure about any aspect of the RDEC claim process, consult with a qualified R&D tax specialist.
Utilise HMRC Resources: HMRC provides guidance and resources on its website. Familiarize yourself with these materials.
Keep up to date: RDEC guidance and rates can change, so stay up to date with the latest HMRC publications.
While the RDEC scheme offers significant financial benefits, navigating the administrative process requires careful attention to detail. By understanding the requirements of the Additional Information Form and your CT600 tax return, and by maintaining accurate records, you can ensure a smooth and robust RDEC claim.
Visit HMRC's claim notification page.