As of 1 August 2023, businesses seeking R&D tax relief must adhere to a new requirement: submitting an additional information form. This applies to the SME and RDEC schemes and must be completed before filing the Corporation Tax return. Failure to comply will result in HMRC being unable to process the claim.

The additional information form collects crucial details to support your R&D tax relief claim. It begins with company information, including the Unique Taxpayer Reference (UTR), employer PAYE reference number, VAT registration number, and Standard Industrial Classification (SIC) code, indicating the type of business. Furthermore, contact details should be provided for the senior representative responsible for the claim and any involved agents.

Accurate accounting period details are essential, ensuring they align with those in your Company Tax Return. This includes the start and end dates for which you claim the tax relief. Additionally, you must specify which relief is being claimed, whether it is SME, RDEC, or both.

A summary of qualifying expenditure by cost category must be provided to support your claim, with a clear separation of preparing indirect activities (QIAs). This allows HMRC to gain insight into the distribution of costs and ensure compliance with the scheme’s guidelines.

Moving on to project details, the number of project descriptions required depends on the number of projects included in the claim. For claims with 1 to 3 projects, details for each project should be provided. In cases involving 4 to 10 projects, parties are required for projects that account for at least 50% of the qualifying expenditure, with a minimum of 3 projects. If your claim encompasses 11 or more projects, details are needed for those that contribute at least 50% of the qualifying expenditure, with a minimum of 3 projects and a maximum of 10. When qualifying expenditure is divided among smaller tasks, you should describe the ten largest.

When crafting project descriptions, several essential components should be included. Start with identifying the main field of science or technology to which the project relates. Describe the baseline level of science or technology at the project’s inception, outlining the advancements in scientific or technological knowledge your company aimed to achieve. Address the scientific or technical uncertainties faced during the project, then explain how the project sought to overcome these uncertainties.

It’s important to note that you can provide additional information beyond what is required on the form. This may include details about the methodology used to identify and record R&D activities, the preparation of the claim, biographies of competent professionals involved, or detailed breakdowns of qualifying costs and apportionments supporting the headline figure for each cost category. When submitting additional information, prepare a separate report to accompany the CT600, and indicate the submission of additional information by marking an “X” in box 657 of the CT600.

These new requirements for additional information apply to all claims submitted from 1 August 2023, regardless of the accounting period. Reviewing your methodology and assessing its robustness in light of these changes and HMRC’s enhanced compliance activity is crucial.

At Tungsten, our location in South Wales positions us as an ideal partner to support businesses in navigating the evolving landscape of R&D tax relief. We understand the complexities and importance of preparing detailed project descriptions to strengthen your claims. With our team of financial and engineering experts, we can provide the additional capacity and expertise needed to ensure your in-house team is well-equipped to meet the new requirements effectively.

We encourage you to proactively review your processes, methodology, and documentation in response to these changes. By ensuring compliance and robustness, you can maximise the benefits of R&D tax relief while mitigating potential risks. Tungsten is here to assist you every step of the way, providing guidance and support to help your business thrive. Let us help you streamline your R&D tax relief claims and optimise your financial position.