Whether you’re an experienced tax adviser or you’re on the business end of your first R&D tax claim in your career, it can sometimes be helpful to step back and take a look at the entire process holistically.
Our advisory team are experts in R&D tax, so we’ve broken down the entire claims process from start to finish.
This is your guide to advising clients and making sure that they’re always incentivised to innovate.
Identifying qualifying activity
Your client may approach you to discuss submitting a claim but, more often, we find that it’s down to our accountancy partners to take the first step.
Get started by making sure you’re familiar with your clients’ work and areas that might be eligible for a claim.
You can then broach the subject with confidence and begin to discuss their work in more detail. This is the point that you may benefit from advice from an R&D tax specialist, to assess your client’s work and discuss with them in more detail about how they qualify for the relief.
You’ll also need to identify qualifying work and decide whether to proceed with the claim. It must be:
- An original project which seeks to overcome an industry uncertainty
- A contribution to science or technology
- A contribution to the sector’s overall knowledge, not just the business
- New or an ‘appreciable improvement’ over an existing product, material or process.
If your client’s work meets all these criteria, you can begin to discuss qualifying costs and gathering evidence for a claim.
Preparing a claim
Before you prepare the claim, consider whether your client needs to give HMRC advance notification of intention to submit.
If your client’s accounting period began on or after 1 April 2024, they’ll need to tell HMRC before they submit a claim if:
- This is their first submission
- Their most recent submission was three or more years ago.
This must be done between the first day of the accounting period to which the claim relates and six months after the end of the same accounting period.
When preparing a claim, your client will need a substantial amount of financial information and evidence of qualifying activities.
We can advise you and your client on the information they need and how to prepare in a way that is likely to satisfy HMRC that their work is compliant and eligible for the scheme.
Claim submission
When the preliminary information is prepared, you’ll need to work with them to complete the Additional Information Form (AIF), informing HMRC of:
- The claimant
- Contact details for a Competent Professional or senior R&D contact
- R&D intensity
- Qualifying expenditure
- A cost breakdown
Additionally, you’ll be required to provide a technical narrative which breaks down how your client’s work fits the criteria provided, including the advancements sought and how it qualifies.
We can help you to prepare this or do so on your behalf to add value to your client’s experience with your firm – preparing claims with expertise and integrity.
This must be submitted before you can submit a formal claim on behalf of your client as part of their Company Tax Return.
Post-submission: Enquiries
HMRC has cracked down on non-compliance within the scheme in 2024 following the introduction of anti-abuse units and a programme of enquiries into claims.
There is now a higher likelihood than in previous years that your client may face an investigation into their claim. The Treasury is under pressure to reduce unnecessary expenditure wherever possible – and previous issues with R&D tax make it a prime target for this.
If your client’s claim is queried, HMRC will write to them (or you as their agent) and inform you:
- The grounds for the challenge
- Any additional documentation that is initially required.
A ‘caseworker’ will then assess the evidence and reach a decision.
Many of these enquiries will take place after the credit or relief has been granted, so make your client is aware of this and be on hand to help them plan their cash flow around potential investigations.
Enquiries can be challenging for you and your client, particularly when disputes arise over the most technical aspects of R&D tax. We’re here to advise you through the process, and any other element of an R&D tax claim.
For expert support with R&D tax to make the process easier for you and your client, get in touch with our advisory team today.
