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Walking the tightrope – Supporting R&D claims with additional information

Author: Tom Mason

If you support clients with long-standing investment in R&D projects, you may still be finding your feet when it comes to the Additional Information Form (AIF) and its stringent requirements relating to successful claims.

Introduced in August 2023, the AIF is designed to enhance compliance with qualifying requirements for R&D tax relief claims and support HM Revenue & Customs (HMRC) in identifying illegitimate claims.

In the course of our work with accountancy practices and their R&D clients, we understand that submitting AIF can be a stumbling block for firms without in-house R&D specialists – a concern which we’re going to address here.

Project details

One of the most substantial and complex parts of submitting the AIF is the requirement to include project details.

This is because the requirements differ depending on how many claims are included within the form. Both approaches are hugely detailed and require advanced preparation. Your client will either be expected to include:

  • Details for all qualifying expenditure – If they are claiming for between one and three projects.
  • Either details for 10 projects or for as many projects as make up at least 50 per cent of qualifying expenditure across at least three projects.

We would always recommend working with an R&D specialist for this section in particular, as this may well be used to determine the validity of a claim and so this part of the AIF will need to clearly demonstrate how the project qualifies as R&D.

Qualifying expenditure

Your client should have a good understanding of their expenditure and, with your support, should be able to provide a breakdown of this spending as it relates to R&D activities.

The definition of what qualifies as eligible expenditure can be difficult to pin down, particularly as certain expenditure was applicable under the SME tax relief scheme, now merged with the RDEC.

However, in general, your clients are likely to need to detail the following on any AIF submissions:

  • Staff costs
  • Certain subcontractor costs
  • Consumables
  • Cloud computing costs (for accounting periods beginning on or after 1 April 2023)
  • Software

For certain costs, such as staffing costs, your client will need to take care to only claim for costs directly related to R&D activities or their claim could be called into question.

We can provide support in determining what expenditure is likely to be classed as genuine under the scheme to avoid undue scrutiny and a prolonged timeline for you and your client’s work.

These two parts of the AIF are highly complex and can cause confusion for the most seasoned of accountancy firms without in-house R&D expertise.

If your clients are submitting a claim for a new project or a new claim for an existing project, the AIF will be the key to ensuring that the claim is accepted and your client benefits from the scheme, allowing them to continue to invest in R&D.

We’re on hand to help you keep your clients’ R&D claims on track. Get in touch with our team today to find out how we can support you.