Timing is very important when it comes to preparing R&D tax claims.
This is particularly true under new regulations which require some claims to be preceded by a pre-claim advanced notification.
There are several steps to crafting and submitting a successful claim, and your clients will rely on you to advise them as to the best course to take. To help you get it right, our experts are here with their insight!
Advanced notification
In a bid to prevent spurious or last-minute claims, claimants or their agents are now required to notify HMRC within a certain time frame if they have either:
- Never claimed before, or;
- Made a claim, but not within the last three years.
For any given accounting period starting on or after 1 April 2023, pre-notification can be submitted between the first day of the period and six months after the end date of the same period.
For this reason, you need to discuss R&D tax claims with your clients as early as possible to give them the best chance of meeting all the relevant deadlines.
Bringing claims forward
You may be aware that R&D tax credits are claimed through the Company Tax Return, up to two years after the end of the accounting period to which the expenditure relates.
Clients can either submit their CTR (with details of their claim included) before or after paying their Corporation Tax bill for the same accounting period, provided the CTR is submitted before the typical 12-month deadline.
We know some of your clients may prefer to defer preparing their CTR until the last minute, i.e. after they have paid their Corporation Tax for that accounting period.
However, they will gain a number of advantages by preparing claims sooner rather than later.
Should my client claim early?
An early claim submission will allow clients to remove the need to pay tax and then claim it back later, which can impact cash flow and create delays.
These advantages include:
- Cash flow – Not having to pay tax and then claim it back can boost cash flow, and loss-making companies that wish to surrender get cash into the business quicker.
- Fresh technical information – It is generally easier to prepare claims with detailed information when it is fresh in the mind, as close to the end of the accounting period as possible.
- Mitigate staff movement – If a Competent Professional leaves the business, there is limited technical information that you or your R&D tax support partner can extract.
- Preventing duplication of work – Accounts preparation will involve a lot of the same information as your R&D tax claim, so it is worth combining the two processes.
Getting R&D tax claims right takes time, so we always recommend making them a priority and bringing them in line with other year-end tax work, such as accounts and Corporation Tax preparation.
This is an excellent way to add value for your clients by streamlining the work you do for them and ensuring their claims are submitted on time.
If you need support with preparing R&D tax claims for your clients, we can help. Contact our team today to discuss your requirements.