HMRC published amended notes on 7 November 2023 for the completion of the CT600 Corporation Tax return when it includes an R&D claim. The new guidance confirms that the Additional Information Form (AIF) can be submitted at the same time as the return, contrary to HMRC's recent R&D practice.
- Submission of the AIF became compulsory for the filing of all R&D claims from 8 August 2023, under provisions enacted by Finance (No.2) Act 2023.
- The wording of the legislation (now incorporated into Finance Act 1998) specifically states that the AIF must be provided 'not later than the date on which the claim is made'. As most claims are invariably submitted as part of the CT600, strict interpretation of the legislation would allow for the AIF to be submitted at the same time as the CT600 return.
- Since 8 August 2023, there has been a noticeable increase in the number of R&D claims being rejected by HMRC without examination.
- HMRC have stated in recent letters to companies claiming the relief, as well as in their October Agent Update that they will reject claims where the AIF has not been submitted in advance of the CT600 return. The HMRC guidance on submitting a valid claim also makes this clear: 'You will need to send us an additional information form before you submit your company’s Corporation Tax Return. If you do not do this, we will write to you to confirm that we’ve removed your claim for R&D tax relief from your Company Tax Return.'
- This seemingly contradicts the actual legislation and has been causing concern and frustration among advisers and taxpayers alike.
As of the 7 November 2023 update, there may be reason to believe that HMRC have acknowledged their mistake and the current practice will cease.
The update history to 'The Company Tax Return Guide' notes that the Box 657 guidance has been updated to read 'the form must be submitted in advance of, or at the same time as, the Company Tax Return.' This appears to be good news, although the accompanying HMRC guidance has yet to be updated.
Useful guides on this topic
Research & Development Tax Reliefs
What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?
R&D Tax Relief reform
In July 2022, the government has published draft legislation as part of Finance Bill 2022-23, which sets out the planned reforms of the Research & Development (R&D) Tax Relief. As previously announced, the relief will be expanded to cover a wider range of expenditure and relief will be restricted in part to focus more on rewarding UK expenditure.
External links
Guidance: Submit detailed information before you claim Research and Development (R&D) tax relief
Guidance: The Company Tax Return guide
Finance (No 2) Act 2023 - Sch 1 para 13
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