HMRC has just launched an R&D online form to help UK businesses and their agents disclose inaccuracies in R&D tax claims.

You will find the HMRC form and guidance at R&D Tax Disclosure Facility.

What Is a Disclosure?

A disclosure happens when you notify HMRC about errors in your tax affairs—whether it’s underreporting income, overstating expenses, or failing to declare taxable earnings. Disclosures give taxpayers the chance to fix these mistakes and reduce penalties.

Who Is This Facility For?

The R&D Disclosure Facility is designed for:

• R&D claims that are out of time to amend via the company tax return.
• Customers who have mistakenly included inaccuracies in their R&D claims, whether due to reasonable care or carelessness.
• Customers that need to pay further Corporation Tax or pay back overpaid tax credits for R&D relief

Important Note: Deliberate inaccuracies disclosed through this facility will be redirected to the Contractual Disclosure Facility for further handling.

A disclosure can be made by a company director, or company secretary, or on behalf of someone else (for example, if you’re a tax adviser).

This facility is specifically for R&D tax claims. Any other disclosures (for example, unpaid tax unrelated to R&D tax relief) must be made through the relevant disclosure facility.

If there’s no credit to pay back nor Corporation Tax to pay, then companies can write to HMRC’s R&D tax team directly to inform them of the error, instead of using this portal.

Different Types of Disclosures

Disclosures fall into two categories: unprompted or prompted.

Unprompted disclosures are proactive, resulting in lower penalties, while prompted disclosures are reactive and come with higher penalties.

Unprompted Disclosure

This is when a taxpayer voluntarily contacts HMRC to disclose an error before HMRC initiates an investigation. This proactive step demonstrates a willingness to cooperate and fix the issue without pressure.

Advantages of Unprompted Disclosure:

• Lower Penalties: HMRC imposes significantly smaller penalties for unprompted disclosures.
• Builds Goodwill: It signals transparency and cooperation, which helps foster goodwill.
• Faster Resolution: Issues are resolved more quickly when addressed proactively.

Penalty Range for Unprompted Disclosure:

• Careless errors: 0%-30% of the tax due.
• Deliberate (but not concealed) errors: 20%-70% of the tax due.
• Deliberate and concealed errors: 30%-100% of the tax due.

Prompted Disclosure

A prompted disclosure occurs after HMRC contacts you about your tax affairs—whether through a letter, phone call, or formal investigation.

Challenges of Prompted Disclosures:

• Higher Penalties: HMRC imposes larger penalties as they had to initiate compliance action.
• Signals Non-Compliance: It suggests a reluctance to address the issue without intervention.
• Potential Legal Action: HMRC may pursue legal action, including prosecution, for deliberate and concealed errors.

Penalty Range for Prompted Disclosures:

• Careless errors: 15%-30% of the tax due.
• Deliberate (but not concealed) errors: 35%-70% of the tax due.
• Deliberate and concealed errors: 50%-100% of the tax due.

How Penalties Are Decided

HMRC takes several factors into account when determining penalties:

• Level of Cooperation: Fully cooperating can help reduce penalties.
• Nature of the Error: Careless mistakes result in lower penalties than deliberate or concealed errors.
• Taxpayer Behaviour: A compliance history can positively influence HMRC’s approach.

How Does It Work?

The facility operates as a straightforward online form on the HMRC website. Customers or agents will need to upload:

• Detailed computations.
• Explanations of inaccuracies.
• A letter of offer.

The form also allows users to self-assess and pay any tax, tax credit repayments, interest, and penalties owed.

Once HMRC reviews the disclosure, a letter of acceptance will be issued if the offer is deemed satisfactory.

The process is designed to help customers/agents resolve inaccuracies efficiently and minimise further compliance issues.

Making a Disclosure

You’ll need a Government Gateway user ID and password to submit the form and pay any amounts due.

To make a disclosure, follow these steps:

1. Calculate Tax Owed: Include interest and penalties in your calculation.
2. Letter of Offer: This is part of a contract settlement and included in the form.
3. Submit the Form: You’ll need to provide some company information:

• • Company name
  • Unique Taxpayer Reference and registered address
  • SIC code
  • Company’s HMRC customer compliance manager, if applicable
  • Agent who prepared the original claim, if known
  • Relevant accounting periods
  • Reasons for the inaccuracy
  • Calculations of how much you owe

4. Pay the Amount Due: Settle the outstanding tax, interest, and penalties.

We recommend you prepare the form and calculate the tax owed in advance of starting the process, as the form will time you out if you don’t have the details to hand. You must submit the form within 90 calendar days of starting it.

Agents will need to complete a Comp1a form to allow HMRC to communicate with them temporarily.

You may find it helpful to get professional advice from a reputable R&D tax advisor to ensure your calculations are accurate. You don’t want to submit an extra disclosure!

After you submit your disclosure, HMRC will either write you a letter of acceptance or contact you for more information.

If the company cannot pay what it owes in one go, you can ask for more time. HMRC will usually offer companies 12 months to pay their balance.

Revised R&D Tax Relief Computations

The computation needs to include:

• the full original and a revised Corporation Tax computation for the accounting period (not just the R&D part)
• a breakdown of both sets of computations, including:
  • categories of qualifying expenditure
  • amounts claimed in each of those categories
• computations of group relief amendments and the name, UTR and revised Corporation Tax computations for the impacted companies

You’ll need to work out how much you owe HMRC for each accounting period.

The company’s disclosure should include accounting periods up to a maximum of either: 

• 4 years from the end of the relevant tax period if they’ve taken reasonable care 
• 6 years from the end of the relevant tax period if careless

The computations can be uploaded as a PDF, JPEG, XLSX, DOCX or PPTX, so long as it’s less than 10MB.

Key Takeaway

If you spot an error in your tax affairs, act quickly and make an unprompted disclosure to minimise penalties and demonstrate a commitment to compliance.

Need advice? Reach out—we’re here to help you navigate the process effectively.