If you’re an accountant wondering how to help your client with R&D, understanding the impact of the Additional Information Form (AIF) is crucial.
Despite only being introduced in August 2023, the AIF has already begun to reshape how R&D tax claims are submitted.
While the form aims to increase transparency and reduce non-compliant claims, early statistics from HMRC suggest that it may have unintended consequences, especially for smaller businesses and first-time applicants.
R&D tax consultants are increasingly in demand to offer R&D help for accountants, helping them create successful claims for their clients.
A shift in claim patterns
One of the most notable changes since the AIF became mandatory is the shift in the size of claims.
We’ve seen a decrease in claims under £250,000, while claims above this threshold are on the rise. This trend seems to be driven by the added complexity of the AIF, which has made smaller claims less attractive.
For smaller businesses, the time and effort required to meet the new documentation standards can make claiming less viable.
First-time claimants, unfamiliar with the process, may be discouraged by the detailed information now required.
Meanwhile, larger companies with the resources to manage the additional workload are more likely to prioritise bigger claims.
Reducing spurious claims
One of the primary goals of the AIF is to reduce spurious claims by demanding more detailed project descriptions and evidence.
This has undoubtedly helped to eliminate claims lacking proper support, especially those submitted without expert assistance.
However, while this promotes compliance, it may also create barriers for businesses that depend on R&D tax relief as a critical funding source.
The added administrative burden risks excluding smaller players from the system, particularly those just starting their innovation journey.
This could inadvertently create a “minimum claim threshold,” where only businesses with significant projects can realistically meet the new requirements.
Will smaller businesses be left behind?
While the AIF is making strides in ensuring compliance, its impact on smaller businesses and first-time claimants cannot be overlooked.
It will be important to continue to monitor these changes to ensure that innovation remains accessible to all businesses, regardless of their size.
For accountants, this shift highlights the importance of working with specialist R&D tax consultants to ensure your clients can secure the relief they deserve, particularly the smaller business you work with.
If you need support with preparing R&D tax claims for your clients, we can help. Contact our team today to discuss your requirements.