Your trusted adviser for R&D Tax Credits, Creative Tax Relief, and R&D Grants

R&D Tax Credits

R&D tax credits are a generous government incentive to reward UK companies for investing in innovation. You can claim up to 27% of your R&D costs. The scheme is managed by HMRC and claimed as part of your company tax return submission.

Myriad is your trusted R&D tax credit partner. We have helped businesses make successful claims for over 23 years. Partnering with Myriad means your claim is robust, compliant and optimised. 

Our R&D Tax Credit Promise

R&D Tax Credits

What are R&D tax credits?


R&D tax credits are a popular government incentive that empowers you to reduce your Corporation Tax bill for innovative projects.

Since 2000, the UK government has offered a cash injection to SMEs and large companies to promote innovation in the UK. This credit can be worth up to 27% of the expenditure invested in R&D.

To be eligible for R&D tax credits, you must:

  • Be registered for corporation tax in the UK.
  • Be a going concern at the time of submission.
  • Have settled all the costs from the accounting period.

With the above list and at least one qualifying project, you’re nearly there.

For first-time claimants or for companies whose last claim was more than three years ago, you’ll need to let HMRC know that you intend to make a claim within six months of the end of your accounting period.

Making a valid claim for your full entitlement requires some know-how, an R&D technical report, and a detailed costing report.

16716 Barrie D V2 2

What projects qualify for R&D tax credits?


There are two main criteria for a project to be eligible for R&D tax relief.

Your project must:

  • Seek to make an advance in science or technology.
  • Seek to overcome scientific or technological uncertainty.

On top of this, your project must not be in social sciences, arts, humanities or economics.

You can seek to make an advance by developing a new product, service or process, or by improving an existing one.

For example, a company with a project in IT which involves developing a new process for extracting a specific form of data, which the company’s software experts cannot easily say how to create, may qualify.

However, a company developing a new website would not qualify, as this does not advance any technology, and a software expert could say how to achieve it quickly.

To help you further navigate this complex question, we're offering you two essential resources which are free to download:

Get Your Free R&D Assessment Tools

What can be claimed?


You can claim relief on costs that have been expensed through the your Profit & Loss account. and i In certain circumstances, you can also claim capitalised expenditure (providing that the assets purchased have been classified as Intangible Assets).

The main areas of costs that can be claimed are:

  • staff costs (including gross pay, employer's NI, reimbursed expenses and employer's pension contributions);
  • agency workers (externally provided workers);
  • subcontractors/freelancers;
  • software license costs;
  • cloud computing costs & data licenses;
  • consumable items (heat, light and power, and materials and equipment used or transformed by the R&D process);
Who is eligible for R&D Tax Credits?
Whats the process to claim R&D Tax Credits

How to claim R&D tax credits?


To prepare your claim, you’ll need to:

  • Assess which projects qualify
  • Gather your R&D costs
  • Apportion these costs to each R&D project
  • Write a technical report

Your technical report must cover all your R&D projects if you have three or fewer. If you have four or more projects, your report should include at least three projects which cover 50% of the cost.

Before you claim, you must submit an Additional Information Form (AIF), which requires information from the technical and costing reports. You’ll also need to check whether you need to notify HMRC in advance.

You’ll submit your R&D tax claim using your Company Tax Return.

How much is an R&D Tax Credit claim worth to a profit-making SME?


The R&D tax relief would enable a profitable SME to reduce the corporation tax they pay on profits for the period by the amount of the enhanced deduction.

For expenditure up to 31st March 2023, the enhanced deduction is at 130%. This rate results in a benefit of up to 24.7% on R&D expenditure.

The enhanced deduction is 86% for expenditures from 1 April 2023. This rate results in a benefit of up to 21.5% on R&D expenditures.

If the deduction is greater than the SME’s profit for the period, then this will create a loss for corporation tax purposes.

What type of costs are eligible UK
Capital Allowances Graphics 01

How much is an R&D Tax Credit claim worth to a loss-making SME?


Where the additional enhanced R&D deduction is greater than the SME’s taxable profit for the relevant accounting period, this creates a loss for corporation tax purposes. The SME can then decide between the following options:

  • carry back the loss to the previous accounting period (if there was a taxable profit);
  • carry the loss forward and offset it against future profits, or
  • surrender the loss (fully or partially) to HMRC in return for a payable R&D tax credit.

You’ll submit your R&D tax claim using your Company Tax Return.

What are the rates for R&D-intensive SMEs?


For companies that make R&D a cornerstone of their business, enhanced relief is available. This offers a higher tax credit rate for companies who spend a higher proportion of their costs on R&D activities, compared to standard, non-R&D activities. These SMEs can claim a higher rate of credit of 14.5%. You can claim enhanced R&D intensive support if your company:

  • is an SME
  • makes a trading loss for tax purposes before relief is calculated
  • meets the R&D intensity condition:
    • at least 40% for expenditure incurred on or after 1 April 2023
    • at least 30% for accounting periods beginning on or after 1 April 2024

The government has also introduced a one-year grace period for companies that fail to meet the intensity threshold to continue claiming the higher relief rate in that year, so long as it meets the intensity threshold and successfully claims enhanced support in the previous year. The one-year grace period will apply to accounting periods beginning on or after 1 April 2024.

What type of projects are eligible for Innovate UK funding
illustration-5.png

How much is an R&D Tax Credit claim worth to a large company?


The R&D Expenditure Credit was introduced on 1 April 2013 and seeks to serve larger companies with a different rate and different tax treatment. The RDEC is a taxable receipt paid net of tax to companies with no corporation tax liability. However, it is subject to corporation tax, so the net benefit will be the gross RDEC amount less the corporation tax rate for the applicable claim period.

  • For expenditure up to 31st March 2023, the gross rate is 10.5% of eligible R&D expenditure.
  • For expenditure from 1st April 2023, the gross rate is 20% of eligible R&D expenditure.

The amount that can be received in cash from HMRC is capped by the total PAYE/NIC liabilities paid to HMRC for R&D staff.

R&D Tax Credits Calculator


This R&D tax credits calculator will provide you with an estimate of the corporation tax savings that you may receive from HMRC following a claim for R&D tax relief.

Which scheme are you eligible for?

What is this? SME scheme qualification is less than 500 employees and one of the following; annual turnover not exceeding €100m or balance sheet not exceeding €86m.

Is the company profit or loss making?

What is your annual R&D costs on staff, agency workers, software and consumable items?

What is this? Staff costs include gross pay, NI ERS and company pension payments. Agency labour cost is restricted to 65% of the invoice value. Software license costs relate to costs expensed to the P&L account and not treated as a fixed asset. Consumable costs relate to items that are consumed or transformed during the development process such as materials, components and electricity or gas etc.

Enter Amount

What is your annual expenditure (before VAT) on unconnected sub-contractors who are involved with R&D activities (£)

What is this? Enter the annual expenditure on sub-contractors who are involved with R&D activities.

Enter Amount

We estimate you can save up to:

£510,625Reset


Contact our R&D tax specialists to make sure your R&D tax relief
claim is fully maximised.

Get in touch to make your claim
Rd Tax Ebook Square

Do you invest in research and development?


In this eBook, we help UK businesses understand everything they need to know about the R&D Tax Credits scheme.

You can learn about the basics of preparing an R&D tax claim, the latest changes and how to maximise your claim. Whether you’re a small- or medium-sized business or a large company, our latest guide has something for everyone.

Download our free eBook now!

Unrivaled Expertise with Zero-Risk Guarantee


At Myriad, we're not just another tax incentives consultancy. Our promise to you is simple: we stand firmly behind our advice and opinions. If your R&D tax claim, which we prepared, is challenged, we'll defend it free of charge. If your claim is rejected, we won't charge you any fees, cover any HMRC penalties, and even compensate you for your time.

Get in touch today!
Video Item
  • Zero Financial Risk: We defend your claim at no extra charge, even up to the first-tier tax tribunal. If rejected, we charge no fees, cover penalties, and compensate your time. With Myriad, you're fully protected throughout the R&D tax credit process.

  • Success Fee Only: As experts in R&D tax services, we’re so confident in our process that we work on a success fee-only basis. You don’t pay unless we deliver.

  • Effortless for You: Let us manage your R&D tax claim, everything from start to finish with minimal involvement from your team. Our process requires only a few hours of your time across the entire claim, so you can focus on running your business.

  • Maximised Claim Value: Our R&D tax professionals don’t just identify the obvious. We find the often-overlooked qualifying projects and expenses, ensuring your claim is optimised for maximum value.

Our experience

  • Over Two Decades of Expertise: For over 23 years, we’ve proudly provided expert R&D tax credit guidance, achieving a consistently high success rate. Our track record speaks volumes about the quality and reliability you can expect when you work with us. Why gamble when you can ensure success with Myriad?
  • Trusted by Our Clients: Our clients value our insight and expertise. Our reputation is built on trust and results, ensuring you’ll have the confidence and clarity needed to secure the claim you deserve.
  • Ensuring Claim Value: We specialise in securing the full and accurate value of your R&D tax claim. Many clients have seen significant increases after switching to our services, unlocking additional funds they didn’t realise they were entitled to.
  • Industry-Specific Expertise: Our specialists provide tailored R&D tax credit expertise across various industries, from engineering, manufacturing, and pharmaceuticals to digital design and immersive technologies. Whatever your sector, we’ve got the expertise to secure your claim.
  • Direct Access to Experts: At Myriad, you speak directly with R&D tax experts, not salespeople. Every interaction is with a specialist who knows the intricacies of the claims process inside and out. Book your free 30-minute consultation today.
Illustration 06
Laptop Image V3

Tax Cloud - R&D tax credits claim service

Tax Cloud by Myriad is a unique R&D tax claim service designed for businesses seeking control, efficiency, and affordability through a user-friendly online platform.

With seamless integrations to accounting platforms like Xero, Tax Cloud allows you to manage and prepare your R&D tax credit claims with ease while still benefiting from Myriad’s deep expertise and hands-on support.

Visit Tax Cloud

HMRC enquiry support service


HMRC enquiries into R&D tax relief claims are on the rise.

Myriad offers actionable advice on R&D tax relief compliance checks made by HMRC, even if your claim was not submitted through us. We provide proactive reviews that can help ensure peace of mind during these uncertain times.

  • Pre-submission, our team assesses the R&D tax claim you have prepared and provides advice to ensure the claim adheres to HMRC's ever-changing regulations.
  • Post-submission, our team responds to HMRC on your behalf to secure the best possible outcome for you.
illustration-5.png

Common R&D tax credit FAQs


There are a couple of ways to account for R&D tax credits, which depend on whether the claim is made under the SME scheme or the RDEC scheme.

The SME R&D Tax credit is not part of the company’s taxable income. Therefore, it will be shown as an adjustment to the company’s corporation tax charge in the income statement (i.e., a “below the line” adjustment).

This can be done before finalising the statutory accounts for the year the claim is made or retrospectively by way of an over/under provision to the corporation tax charge.

The Research and Development Expenditure Credit (RDEC) works slightly differently because the adjustment occurs “above the line” in the income statement. The RDEC forms part of the company’s income for corporation tax purposes. There are a few ways to account for this; therefore, the most appropriate method is best discussed with your accountant/auditor or R&D tax advisor.

UK companies can make an R&D tax credit claim up to two years from the end of the accounting period. For example, a company with an accounting period ending 31st December 2024 can claim for work done in this year until midnight, 31st December 2026.

You can claim for R&D tax relief even if you’ve already submitted your corporation tax return; you must submit an amended tax return within the deadline to make your claim.

This usually means that companies can claim for the two preceding accounting periods. There is no requirement to claim for the periods in order. However, we recommend making your claim for the earliest period first, as it becomes harder to remember the details for the period the longer you wait.

If you’re a first-time claimant or it’s been more than three years since you made a claim, you may need to notify HMRC earlier if you intend to make a claim.

Many businesses don’t realise that they are undertaking eligible qualifying activities. It is not uncommon for their accountants to forget to tell them about R&D Tax Credits or even to say to them that they don’t qualify.

If your technical lead (the R&D manager, lead engineer, or lead developer) is struggling to overcome the technical challenges of your project – if they are scratching their head wondering how to proceed or losing sleep worrying about the technical uncertainties they face – your project will almost certainly qualify for R&D Tax Credits.

It’s well worth discussing this with our team before you decide.

If you make a claim for R&D tax relief after the two-year deadline from the end of your accounting period, you might be able to still access your benefit. The success of these appeals depends on the facts of the case; however, HMRC will rarely allow a late claim based on insufficient time or not being aware of the R&D tax relief scheme.

HMRC will follow their Statement of Practice SP 05/01 guidance to deal with late claims. HMRC presents two examples which may result in the claim being accepted, assuming this was “beyond the company’s control” :

“At the date of the expiry of the time limit, the company or its agents were unaware of profits against which the company could claim relief.”

“The amount of a profit or loss depended on discussions with an inspector which were not complete when the time limit expired, and the delay in agreeing on figures is not substantially the fault of the company or its agents.”

When you claim R&D tax relief, one of the HMRC's R&D specialist units will review and process it. It is standard practice for an inspector at the HMRC R&D unit to review the first claim that is made by a business. If the inspector has any questions relating to the claim, then they will make an enquiry, which is usually done by writing to the company.

These enquiries are usually limited to the single year being investigated. However, it is possible that HMRC may examine multiple claims. In cases where fraud is suspected, HMRC reserves the right to open a larger audit of the company’s general tax affairs.

To prepare a strong claim that is more likely to withstand an enquiry, we strongly advise that it be supported by a detailed report outlining the technical advancements and uncertainties and providing a detailed breakdown of the eligible R&D costs.

Using a reputable R&D tax advisor to help prepare and submit your claim will show HMRC that your claim was made with a considered approach and is less likely to be suspected of fraud.

SMEs cannot claim for any R&D work that they have been contracted to do for another company. This is because the contracted SME is not taking on the financial risk of the project and did not intend to carry out this R&D at the base.

The exception is if a company undertakes R&D at its own risk to carry out the work that was subcontracted.

SMEs can claim R&D tax relief under the RDEC scheme if a large company contracts the work. Large companies cannot claim for subcontracted work under the RDEC scheme, so there is no risk of “double dipping” by both the contracting and contracted parties.

However, the rules become much clearer for accounting periods beginning on or after 1st April 2024 under the merged scheme. In the new rules, the party who decides to initiate the R&D can claim for the relief. This should be clearly communicated between the parties

In most cases, a company receiving a grant to fund an R&D project can only receive R&D tax credits using the RDEC scheme. This is due to rules around notified state aid, which are a holdover from the European Commission. R&D tax relief through the SME scheme is considered a state aid in itself and, therefore, cannot be claimed on top of another state aid.

The RDEC scheme is not state aid, therefore can be claimed on any costs which are funded by a grant.

For example, a company receives funding to cover 70% of an R&D project that costs £100,000. The part covered by the funding (£70,000) can only receive R&D tax relief through the RDEC scheme. The remaining £30,000 was funded by the company and not by a state aid, therefore qualifies for the more generous SME scheme.

For accounting periods beginning on or after 1st April 2024 (i.e., under the merged scheme), all grant-funded expenditure is eligible for R&D tax relief.

(See also: R&D Grants)

You will need to complete a Full Company Tax Return (CT600) and not a Short Company Tax Return.

If you are an SME, you will need to use CT600 (2023) Version 3 and complete the following boxes:-

  • Box 142 - you need to put a tick in this box.
  • Box 650 - you need to put a tick in this box.
  • Box 656- tick this box if you are claiming for accounting periods beginning on or after 1 April 2023, and you must separately complete the R&D claim notification form in some circumstances.
  • Box 657- you need to put a tick in this box and separately complete the R&D Additional Information Form. The R&D claim will be removed from the CT600 if the R&D Additional Information Form is not completed.
  • Box 660 - you need to insert the total enhanced R&D tax relief. This is the original R&D expenditure plus the additional enhanced R&D tax relief.
  • Box 875 will need to be completed.
  • Box L168 (PAYE/NIC’s for which the company is liable in this accounting period) and L168A (Employer PAYE reference) on the CT600L form.

Common examples of software development projects that may qualify for R&D tax relief include:

  • State-of-the-art software for new projects or new functionality for existing R&D projects;
  • Tools to extend the functionality of application software programs or of an operating system;
  • Extensions to database software, programming languages, or operating systems;
  • Software development tools, such as tools to port data across platforms, tools for image processing or character recognition;
  • Novel data management techniques, such as new object representations and new data structures;
  • Innovative methods of capturing, transmitting, manipulating, and protecting data;
  • Software to run new computer hardware;
  • Software to run on devices with pre-installed operating systems, such as handheld GPS, mobile phones, and tablets; or,
  • Means of integrating hardware and software platforms.

Common examples of product and process development projects that may qualify for R&D tax relief include:

  • Innovative product development using computer-aided design tools.
  • Development of second-generation or improved products.
  • Tooling and equipment fixture design and development.
  • Developing unique computer numerical control programs.
  • Designing innovative programmable logic controllers.
  • Designing innovative manufacturing equipment.
  • Prototyping and three-dimensional solid modelling.
  • Designing and developing cost-effective and innovative operational processes.
  • Integrating new materials to improve product performance and manufacturing processes.
  • Evaluating and determining the most efficient flow of material.
  • Designing and assessing process alternatives.
  • Designing, constructing, and testing product prototypes.
  • Developing processes that would meet increasing regulatory requirements.
  • Streamlining manufacturing processes through automation.

HMRC works to process applications for R&D Tax Credits within 40 working days (increased from the previous 28 days expected). However, the processing time required for HMRC to review and consider an R&D Tax Credit claim depends mainly on the nature of the claim and the complexity of a company’s structure and accounting.

The time of year can make a difference, with peak accounting times such as March and December being particularly busy, resulting in slower processing times.

HMRC processing the claim does not necessarily mean that the claim will not be investigated further; some compliance checks have been opened after the company receives its benefit.

You can claim relief on costs that have been expensed through the Profit & Loss account. In certain circumstances, you can also claim capitalised expenditure (providing that the assets purchased have been classified as Intangible Assets).

The main areas of costs that can be claimed are:

  • Staff costs (Including gross pay, employer's NI, reimbursed expenses and employer's pension contributions);
  • Agency workers (externally provided workers);
  • Subcontractors/freelancers;
  • Software license costs;
  • Cloud computing costs, including storage, for accounting periods beginning on or after 1 April 2023;
  • Data licence costs for accounting periods beginning on or after 1 April 2023;
  • Consumable items (heat, light and power, and materials and equipment used or transformed by the R&D process); and,
  • Payments to the subjects of clinical trials.

It is not uncommon for an R&D team to consist of many individuals from different parts of the business. However, a staff member's job title is not always indicative of R&D; the key thing to note is whether they are contributing to the resolution of uncertainties and to the advancement of the field.

The people working on the physical development are the most obvious staff contributing to the R&D. They will likely have the highest proportion of time spent on a project. This can include:

  • Software developers
  • Scientists
  • Engineers
  • QA roles and testers

Management roles may have some bearing on the carrying on of R&D through consulting or advisory roles and management of the development team, but will be expected to have a lower proportion of time spent on R&D as they will be overseeing work that is not relevant to the R&D done too:

  • CTO
  • Head of R&D or other department heads
  • Project Manager/Coordinator

Finally, some staff may be included due to their qualifying indirect R&D activities. The activity they do is more important than their job role. However, the kinds of roles which may carry out indirect R&D work are:

  • Administrator
  • Finance Assistant

Staff who handle a company's commercial aspects or the ongoing day-to-day running are very unlikely to contribute to its R&D activities. Sales directors, marketing and legal teams, HR staff, and often C-Suite executives are also unlikely to be involved in R&D.

R&D Tax Credits for profit-making SMEs

The R&D tax relief would enable a profitable SME to reduce the corporation tax they pay on profits for the period by the amount of the enhanced deduction.

The current R&D tax credit rate results in a 21.5% benefit on R&D expenditure for profit-making SMEs. If the deduction is greater than the SME’s profit for the period, then this will create a loss for corporation tax purposes.

R&D Tax Credits for loss-making SMEs

Where the additional enhanced R&D deduction is greater than the SME’s taxable profit for the relevant accounting period, this creates a loss for corporation tax purposes.

The SME can then decide between the following options:

  • carry back the loss to the previous accounting period (if there was a taxable profit);
  • carry the loss forward and offset against future profits; or,
  • surrender the loss (fully or partially) to HMRC in return for a payable R&D tax credit.

The company can surrender the lower of the enhanced R&D relief or the taxable losses for the period.

The losses are surrendered for a cash credit (tax credit payable), and the current rate is 10% (14.5% for R&D-intensive companies). So, as the enhanced R&D tax relief is 86%, a cash credit can be worth as much as 18.6p for each £1 of eligible R&D expenditure.

The Research and Development Expenditure Credit was introduced on 1 April 2013 and replaced the original Large Company scheme entirely on 1 April 2016.

The critical difference between the RDEC and the Large Company scheme is that the RDEC allows a loss-making company to receive a payable tax credit.

The RDEC is a taxable receipt, and it is paid net of tax to companies with no corporation tax liability. From 1 April 2023, the RDEC rate was increased from 13% to 20%. From 1 April 2023, the corporation tax rate has risen to 25% from 19% for companies making a profit of over £250,000. The benefit would, therefore, be 15% of the eligible R&D expenditure.

Yes, we can. At Myriad, we tailor our service and are led by our clients. We can adapt our approach to suit our clients’ needs. Working collaboratively with other advisers makes the process smoother and more efficient.

HMRC has increased the number of inspectors in its R&D team, so enquiries are becoming more common. Myriad’s team of expert advisors will support you every step of the way.

This is part of our full consultancy service, with no hidden or extra charges for our enquiry support. We only submit claims that we believe are eligible and will defend them for as long as necessary.

We have experience supporting claimants at every stage of a compliance check, right up to winning at a first-tier tax tribunal.

To be classified as a small- or medium-sized enterprise (SME), you must have fewer than 500 employees AND either a turnover of no more than €100m or gross assets of no more than €86m.

If you breach the turnover and balance sheet thresholds but have less than 500 employees, you will still be classified as a large company for R&D tax purposes.

Other groups and connected enterprises must also be considered when assessing whether your company meets this criterion. If your company does not cross the thresholds individually, but the group does, then you must claim through the RDEC scheme. Thus, acquisitions, takeovers and mergers can impact a company’s SME status.

However, companies in receipt of grant funding or those contracted to do R&D for a large company will still need to claim through the RDEC scheme, even if you do not cross the large company thresholds.

This can be complicated. We suggest you speak to a specialist advisor to ensure your claim is made under the correct scheme.

R&D tax credits are a form of Corporation Tax relief. So, as a Limited Liability Partnership (LLP), you cannot usually claim as you are not registered for UK corporation tax.

However, if your LLP has a corporate member and they are subject to corporation tax on their share of profits from the LLP, then they may be able to benefit from R&D tax relief on R&D activity carried out by the LLP.

HMRC will offset any payable SME R&D tax credit and RDEC against outstanding liabilities for Corporation Tax, VAT, PAYE and NIC before repaying you.

This will happen unless the tax liability has been formally deferred.

Claims for R&D Tax relief are made via the Company Tax Return (CT600).

Before submitting the CT600, you must submit an R&D Additional Information Form detailing the R&D project and costs.

Additionally, for accounting periods beginning on or after 1 April 2023, you must complete the R&D claim notification form in some circumstances.

HMRC would expect someone described as a competent professional to be knowledgeable about the relevant scientific and technological principles involved, aware of the current state of knowledge, have accumulated experience and be recognised as having a successful track record.

This person is likely to be a lead developer or engineer. This person will be best placed to assess which of your projects will count as R&D and to provide the relevant details to enable technical reports to be written.

Choosing the right advisor is an important decision, and a good working relationship with your advisor will ensure your claims are delivered efficiently, are robust and defensible, and are maximised in value.

If you are looking to change advisors, first check your contract; there may be clauses that tie you in for multiple years and carry fees if you terminate. If your current contract doesn't contain such a clause or has expired, then switching is easy; tell your old advisor that you no longer wish to use their services and select a new advisor. At Myriad, we make this transition easy exchanging the relevant information promptly to ensure a smooth handover.

Yes, assuming qualifying activities are being undertaken. Payments to subcontractors can be included.

You can claim up to 65% of the qualifying costs if the third party is not connected to your company.

The work you have subcontracted out need not be classified as R&D in its own right but should form part of a larger project considered to be R&D.

Currently, there is no requirement for the subcontractors to be UK residents or carry out the work in the UK; however, for accounting periods starting on or after 1st April 2024, this will change.

The government intends to limit relief for subcontracted activities to those that take place in the UK only. This will apply to Externally Provided Workers (agency workers) as well. There will be some very narrow exceptions to this, so please speak to an advisor as soon as possible to find out how these rule changes will affect your claim.

For claims made under the RDEC scheme, subcontractors must be individuals or qualifying bodies to be eligible, i.e. not Limited Companies.

R&D starts when work to resolve the scientific or technological uncertainties starts and ends when these uncertainties are resolved or work to resolve them ceases (the “R&D Project Period”).

The R&D Project Period may start or end during an accounting period, so staff time on each R&D project will need to be apportioned accordingly.

Our experts will help you determine the R&D boundaries of your project, identify the elements of R&D within commercial projects and advise you on how to present these to HMRC.

Calculating an accurate apportionment of staff time spent working on qualifying activities within the R&D project will depend on the nature of the work done and the records that you have in place.

Staff joining or leaving the company during the year must consider whether staff are working full or part-time hours.

Staff job roles will also need to be separated into those roles that directly contribute to activities and indirectly support activities.

We advise keeping and maintaining contemporaneous time-keeping systems; however, a formal timesheet system is not always necessary.

If there is no time for recording records in place, staff time will need to be allocated on a just and reasonable basis.

Record-keeping is an essential part of claiming R&D tax relief, and although HMRC sets no specific requirement, they expect to see some form of record.

HMRC accept that first-time claimants or claimants in their first three years are unlikely to have detailed records in place to support all of their R&D. Meeting notes, planning materials, and workflow tracking are all excellent examples of what documents can be kept to support your claims.

Our advisors can work with you to create bespoke methodologies and appropriate record-keeping for your business.

Yes, Companies will need to inform HMRC in advance that they plan to make a claim. They will need to do this using a digital service within six months of the end of the period to which the claim relates.

Speak to an advisor as soon as possible to determine whether you are eligible and ensure your pre-notification is made within the timeframe.

Some companies may wish to change their accounting period; it may be your first accounting period and you want to be in line with the UK financial year (ending 31st March), or to match the period of a group that you recently became a part of, or even to access your R&D tax relief faster by shortening the period.

Companies can change accounting periods by shortening them to up to 6 months long or lengthening them to up to 18 months long. This will not affect your eligibility.

Accounting periods which have lengthened are treated slightly differently on the CT600 when being submitted. A CT600 can only be submitted for a 12-month period. Lengthened accounting periods need to be submitted in two parts; one for the first 12-month period, and another for any extension beyond the 12-month period.

The deadline to make the claim is still 2 years from the end of the period, whether it is a 6-month or 18-month long period.

HMRC recently increased their level of scrutiny following an investigation into the level of error and fraud in the scheme. This investigation was conducted through a period of mandatory random enquiry program (MREP) for SMEs. This involves taking a random sample of claims to more accurately estimate levels of non-compliance. Due to this, all claims are at risk of a compliance check through the random scheme. However, poorly justified claims are at a higher risk of enquiry and definitely at a higher risk of being rejected by HMRC.

HMRC more than doubled the number of people working on R&D compliance, with an extra 300 people. Compliance checks can be conducted long after a claim has been paid out, as HMRC works through its backlog of reviews.

Compliance checks usually begin with a letter asking for more detail on the R&D activities and costs claimed. They may be resolved within a single response or may take much longer to reach a conclusion.

HMRC usually has 12 months from the submission of an R&D tax claim to open a compliance check. In many cases, the enquiry focuses on a single period and does not result in further periods coming under scrutiny.

However, if an HMRC officer discovers new information during a compliance check (or even within the information originally submitted) which leads them to suspect other claims may be ineligible, and the officer could not have been expected to be aware of this during the normal 12-month window, then HMRC can open an enquiry into previous claims.

If it appears that the claimant has not been careless or deliberately fraudulent, then HMRC can open an enquiry into any claim if up to 4 years have passed.

Careless behaviour results in this increasing to 6 years, and deliberate behaviour can open any claim made in the last 20 years up to inspection.

Get in touch today!

Our experts can help you determine whether your activities meet the criteria for R&D tax credit success. Contact us today to schedule a meeting with one of our tax consultants.

GET IN TOUCH
Close

Step 1 of #

Is your business registered for Corporation Tax in the UK or are you a partnership with corporate owners?

Continue

Have you developed new or improved existing products, processes or services in the last 2 accounting periods?

Continue Back

Have you incurred any R&D costs on staff, contractors and consumables?

Continue Back

Does your business have fewer than 500 staff, and either: A turnover of no more than €100 million; or Gross assets of no more than €86 million?

Continue Back

Sorry, you must be a UK limited company or be a Partnership with corporate owners to be eligible for R&D tax credits.

In order to qualify for R&D tax credits you must be seeking to advance science or technology within your industry. As you’ve not developed any new or improved any existing innovative tools, products or services, and not re-developed any existing products, processes or services in the last 2 years. It is unlikely you have any qualifying activity. If you’re unsure, email or call us and we’ll help clarify.

In order to claim R&D tax credits, you need to either employ staff or spend money on contractors, consumable items and other items. If you’re unsure, email or call us and we’ll help clarify.

Thanks for that!

Congrats!! Based on your previous answers, you will qualify for the SME scheme. If you’d like some help maximising and securing your claim, please email or call us.

Congrats!! Based on your previous answers, you will qualify for the RDEC scheme. If you’d like some help maximising and securing your claim, please email or call us.

Speak to an expert Back