By Nikki Spoor, Travel, Audit and Tax Director, White Hart Associates
A little-known change to the rules on when you can claim tax credits for research and development (R&D) could lead to companies missing out on substantial sums of money.
Any firm making an R&D claim for the first time used to have 24 months after their year-end to claim tax credits that may be worth up to 14.5% of their investment, but this timeframe has been slashed to just six months.
And although it might be unfair to suggest that His Majesty’s Revenue and Customs (HMRC) has sneaked this new rule in through the back door, it’s certainly true that it has received little publicity and I’ve spoken to many senior company executives that are completely unaware of it.
What’s changed?
For accounting periods beginning on or after April 1, 2023, any company that wants to claim an R&D tax credit but hasn’t done so previously (or in the past three years), must file an Advanced Notification Form (ANF) to HMRC within six months of its year end. Failure to do so will lead to them missing out. Companies that believe they are fine because they have made a claim within the past three years need to be careful, as the small detail is that these claims must have been made on the initial first filing of their CT600 tax return form and not on amendment. Many R&D claims are made on amendment, especially if you are instructing an alternative firm to your usual accountants and tax advisors to complete a claim. Therefore you should double check whether you need to file an ANF within 6 months of the year end for any of your accounting periods ending post 31 March 2024.
Indeed, some may already have missed out. If your year end was March 2024 and you think you might want to make an R&D claim for that period, it’s already too late – the ANF would need to have been filed by September 30th. For our clients, who we were aware that they had completed qualifying R&D for the year ended 31 March 2024, we contacted them and assisted in making their ANF by due date. We will do the same for the 30 April 2024 year ends that are required to notify by 31 October 2024. It is important that you let your professionals know.
A bizarre anomaly
It might sound odd, but the unfortunate company in the example above could still make an R&D tax relief claim for the year ending March 2023, because that’s before the new regime came in. They would therefore have until March 31, 2025, to file an ANF with HMRC.
When can you claim for R&D?
To qualify for R&D tax reliefs, a company’s work must be part of a specific project to make an advance in science and technology. This must be a genuine advancement and not for routine or using existing technology that is accessible.
As qualified tax experts we can advise on whether we can make a claim on your behalf, by carefully reviewing the work undertaken to help you assess if there is scope for a claim. The R & D tax landscape has changed, which was necessary due to the misuse and fraudulent behaviour of unscrupulous unprofessional advisors and claimants. However this has unfortunately meant that access for R&D incentives has become harder and lesser in value.
Receiving this incentive can make a huge difference to a company. It may enable them to expand their workforce, better reward them or create further innovation within their company. We have seen some amazing growth and innovation stories on the back of the R&D tax work we have assisted companies with.
Get in touch
Contact us and we can assist in navigating whether you might have a claim and, if so, how to go about it. Most importantly, we can make sure that an ANF is filed on time.
White Hart Associates are specialist accountants for the travel industry. Visit whitehartassociates.com or contact 0208 878 8383 for more information.
