Tax specialists urge businesses to be prepared for major R&D change

Newport-headquartered tax and accountancy firm Kilsby Williams is urging businesses to be prepared for a major change to the way research and development (R&D) tax relief is claimed from next month.

R&D claims have typically been submitted to HMRC through a company’s corporation tax return. The claims should be accompanied by a thorough report explaining how the company meets the eligibility criteria, and include a detailed breakdown of costs and methodology.

From 1 August, all R&D claims submitted to HMRC must include an Additional Information Form.

Lucy Lloyd, R&D specialist at Kilsby Williams, said: “The Additional Information Form requires businesses to collect claims and cost data at a much more granular level, with different data headings and on a project-by-project basis.

“However, we feel that it is unlikely to replace the need for a traditional R&D report in most cases, as HMRC are still keen to see an explanation of the methodology and cost sampling techniques used to prepare the claim. Furthermore, there are often parts that we write which include test reports, photographs and other detail that can be included succinctly in our technical narratives.”

The form must be submitted through a new online portal, separate from the corporation tax return, from August.

The form should be completed before or at the same time as the corporation tax return and failing to do so will immediately render an R&D claim as invalid.

Lucy said: “There is limited awareness within businesses of the requirement to submit the Additional Information Form as many have assumed it is similar to the reports already prepared. However, the consequences of failing to submit the form are severe with the claims automatically being invalidated with no method of reinstatement.

“This represents a further milestone in the ongoing changes to the R&D administrative and legislative landscape. It has never been more important to speak to an advisor to ensure your claim meets the current criteria and all administrative requirements.”

Established in 1991, Kilsby Williams works with clients from across South Wales, the Midlands and London, ranging from sole traders to companies in international quoted groups.