HMRC have just published revised guidance on amending earlier years’ R&D claims to include reimbursed employee expenses.

Historically, HMRC disallowed expenses if they were reimbursed, for both SME Research & Development Tax Credits and the Large company R & D scheme. This reduced the amount of qualifying staff costs claimable. This position was reinforced by a statement made by HMRC in October 2014.

HMRC say that their position on reimbursed expenses has now changed. As a result of this, many businesses may have understated claims as a result of their original guidance.

Companies can now claim as qualifying expenditure expenses reimbursed by an employee, provided that:

  • The expense constitutes an expense to the company of employing staff, and
  • The expense was originally paid by the employee to fulfil the requirements of their employment

Companies can amend claims to R&D tax relief made for accounting periods ended between 9 October 2014, and 31 January 2016, so allowing “out of date” claims from the issuing of the guidance on 8 October 2014 to date. 

There is a deadline of 31 January 2018 for claims to be submitted to HMRC. UPDATE: on 15 February 2018 this was extended to 30 April 2018.

See Research & Development: subscriber guide to R & D Staff Costs for examples and illustrations


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For one to one assistance in correcting claims or reclaiming qualifying reimbursed employee expenses please contact our Virtual Tax Partner service.

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