The below has been updated for the changes made to the form.
So, 2023 was a year of change in the R&D world. Some of these changes came into play on 1 April 2023, while others are about to make an impact. Like the compellingly titled, ‘Additional Information’ form that will be required from 1 August 2023.
This means that if you want to claim your eligible R&D tax credits, you’ll need to submit an Additional Information form to HMRC to support all your claims for R&D tax relief or expenditure credit (RDEC). And another thing to bear in mind, this form needs to be submitted before you submit your company’s Corporation Tax Return. If you forget to do this, you might find your claim for R&D tax relief is removed from your Company Tax Return.
I’m on the edge of my seat. What is the Additional Information form?
The Additional Information form is a new requirement for existing claimants to provide HMRC with detailed information about their R&D projects and expenditure. It’s meant to supplement the claim notification form and provide HMRC with a more comprehensive overview of your R&D activities and how they qualify for tax relief.
So, what information do businesses need to provide?
To complete the Additional Information form, you’ll need to provide these details:
Company details:
- Unique Taxpayer Reference (UTR) – this must match the one shown in your Company Tax Return
- Employer PAYE reference number
- VAT registration number
- Business type e.g., your current SIC (Standard Industrial Classification) code
Contact details:
- Main senior internal R&D contact in the company who is responsible for the R&D claim e.g., a company director
- Contact details of any agent involved in the R&D claim
- Accounting periods start and end date for which you’re claiming the tax relief (this must match the one shown in your Company Tax Return).
Qualifying expenditure details:
- Tax relief you’re claiming as a small to medium-sized enterprise (SME)
- Expenditure credit as a large company (RDEC)
If you’re claiming for SME tax relief, you can claim for:
- Cloud computing costs (including storage) for accounting periods beginning on or after 1 April 2023
- Consumable items e.g., materials or utilities
- Data licence costs for accounting periods beginning on or after 1 April 2023
- Externally provided workers
- Payments to participants of a clinical trial
- Software
- Staff
- Subcontractor costs
If you’re claiming for RDEC, you may be able to claim for:
- Cloud computing costs (including storage) for accounting periods beginning on or after 1 April 2023
- Consumable items e.g., materials or utilities
- Contributions to independent R&D costs
- Data licence costs for accounting periods beginning on or after 1 April 2023
- Externally provided workers
- Payments to participants of a clinical trial
- Software
- Staff
- Subcontractor costs
- Contributions to independent R&D costs
Qualifying indirect activities
Include the amount of qualifying expenditure for each project of qualifying indirect activities that do not directly lead to resolving “the uncertainty”. This may include:
- Creating information services for R&D support, such as preparing a report of R&D findings.
- Direct supporting activities, such as maintenance, security, administration and clerical activities, and finance and personnel activities (for the share that relates to R&D).
- Ancillary activities needed to begin R&D e.g., taking on and paying staff, leasing laboratories, and maintaining R&D equipment, including computers used for R&D purposes.
- Training required to directly support the R&D project.
- Research by students and researchers carried out at universities.
- Research including data collection to make new scientific or technological testing, surveys, or sampling methods (where this research is not R&D in its own right).
- Feasibility studies to inform the strategic direction of a specific R&D activity.
Project details
The number of all the projects that you’re claiming for in the accounting period and their details.
If you’re claiming for:
- 1 to 3 projects – describe all the projects you’re claiming for that cover 100% of the qualifying expenditure.
- 4 to 10 projects – describe those projects that account for at least 50% of the total expenditure, with a minimum of 3 projects described.
- 11 to 100 (or more) projects – describe those projects that account for at least 50% of the total expenditure, with a minimum of 3 projects described. If the qualifying expenditure is split across multiple smaller projects, describe the 10 largest.
Once you’ve completed the form, you or your tax agent can submit it through the government gateway using your login credentials. It’s important to make sure all the information is accurate and complete to avoid any delays or issues with your claim.
If you’re an existing claimant, it’s essential to note that the additional information form is a new requirement as of August 1st, 2023. And don’t forget, failure to submit the form before filing your Corporation Tax Return may result in your claim for R&D tax relief being removed (ouch!)
Externally Provided Workers (EPWs)
After filling in the project information, if there are figures relating to EPWs then this information is included here.
If UK based, you would need the EPWs PAYE scheme reference. If not based in the UK, then there is no reference required.
SME Intensive
If the SME claim is R&D intensive this section will also need to be completed.
- Trading and operating expenses (does not include amortisation added back or expenditure on payments or transfers of value to a connected company)
- Section 1308 for adjustments for capitalised expenditure
- Any connected companies and their R&D expenditure (if this is not available currently you will need to continue the form using the 10% non-intensive rate)
The round up
Claiming R&D tax credits can be a beneficial and rewarding process for eligible businesses. But it’s essential you comply with HMRC’s requirements and submit accurate and complete information.
What’s next?
To make sure your business is ticking the right boxes, speak to your R&D Tax Adviser. If that’s CT give us a call. And if it isn’t CT, give us a call — we’ll be happy to help!
