The R&D tax credit is a UK government tax incentive that is claimed via your company corporation tax return (technically called the 'CT600').
This is the first key point to note:
The R&D tax credit is a company tax relief
Your CT600 corporation tax return is filed with HMRC within 12 months of your financial accounting period end. Your accountant would typically prepare this tax return alongside the preparation of your financial statutory accounts.
There are specific boxes within the CT600 that must be completed if your R&D claim is to be accepted by HMRC.
We will prepare your amended return(s) to include completion of the relevant R&D boxes as part of our service to clients (for no additional cost)
R&D Technical Narrative & Supporting Claim Calculations
In addition, HMRC will expect you to file:
- A detailed technical narrative report that justifies how and why your claim falls within the relevant BEIS Guidelines and corporation tax provisions AND
- Detailed supporting calculations that quantify the eligible costs and calculate your claim plus specify how you wish to receive the cash tax benefit.
Gaining an understanding of the nature of the work that you have carried out and helping translate this into a detailed report and calculations that fits within the strict definition of R&D for tax purposes is where the bulk of our work will be carried out.
How will I receive the R&D tax credit benefit?
There are a number of different ways in which you might receive the cash tax benefit from your claim.
- as a reduction in corporation tax payable
- as a refund of corporation tax already paid
- as increased tax losses available to carry forward to offset against future profits
- as increased tax losses available to surrender as 'group relief' (to other eligible group companies)
- as a tax credit rebate
It is important that you (and your advisors) consider all of the available options to ensure that you maximise your potential cash tax saving benefit.
The detailed R&D justification report and calculations can be filed online via the Government Gateway HMRC portal (alongside the CT600) to help ensure that it is safely received by HMRC.
Who reviews my R&D tax claim?
HMRC has specialist R&D Tax Units that review and process all R&D tax claims.
There used to be a number of these specialist HMRC Units spread across the country, but over recent years the teams appear to have been consolidated into three main Units (Manchester, Leicester and Plymouth).
Filing an amended CT600 return
If your tax return has already been filed and you are making a retrospective claim, then you can file an amended CT600 return to claim the benefit of the R&D tax relief.
Don't forget to include your bank account details
If your R&D tax claim will result in a cash refund or rebate from HMRC, don't forget to include your company bank account details in the relevant pages of the CT600 return to help ensure a speedy receipt of the funds.
As you can see, there's a lot to consider and 'get right' - so please reach out if you would like any help.