R&D tax deadlines - Key dates you need to know

• Siddharth Agarwal
• 12 Sep,2024
• Deadline

R&D Tax credits are a valuable financial incentive designed to encourage innovation and development within businesses. However, understanding the R&D tax claim deadline is important for companies looking to benefit from this relief.

The deadline for submitting your R&D tax claim can significantly impact your ability to receive these credits. Typically, businesses have two years from the end of the accounting period in which the R&D expenditure occurred to submit their claims. Missing this deadline can result in lost opportunities for funding and support. Therefore, it’s essential to stay informed about the timelines and requirements for R&D tax claims.

In this blog, we’ll explore everything you need to know about the R&D tax claim deadline, including what to do if you miss it and how to navigate the submission process effectively. Let’s dive in and ensure you’re well-prepared to maximise your R&D tax relief benefits!

What is R&D tax?

R&D Tax refers to research and development tax credits, a government initiative designed to support businesses that invest in innovative projects. These credits are available to companies engaged in activities that advance science or technology, aiming to create new products, processes, or services. The primary goal of R&D Tax credits is to encourage businesses to invest in research and development, which ultimately drives economic growth and competitiveness. .

Eligible activities can include developing new software, improving manufacturing processes, or conducting scientific research. Businesses can claim a percentage of their qualifying R&D expenses as tax relief, which can significantly reduce their tax bill or even result in a cash refund.

To qualify, companies must demonstrate that their projects involve uncertainty and seek to overcome technical challenges. By taking advantage of R&D Tax credits, businesses not only receive financial support but also foster a culture of innovation that can lead to long-term success. Understanding these credits is essential for any company looking to invest in research and development.

Who is eligible for R&D tax credits?

1. Be a limited company subject to UK corporation tax: Only limited companies incorporated in the UK and liable for Corporation Tax can claim R&D Tax Credits.

2. Have incurred qualifying expenditure: Eligible expenses include staff costs, subcontractor costs, software and consumable items used in the R&D process.

3. Be a small or medium-sized enterprise (SME): SMEs are defined as companies with fewer than 500 employees and either an annual turnover not exceeding €100 million or a balance sheet total not exceeding €86 million.

4. Be a large company: Large companies can also claim R&D Tax Credits if they have over 500 employees and meet the financial criteria mentioned above.

5. Company types: Three types of companies are eligible to claim R&D Tax credit. They are: 1.Manufacturing company 2.Information & Communication 3.Professional, Scientific and Technical Services.

It's important to note that even if a company doesn't directly conduct R&D, it may still be eligible for tax credits if it subcontracts R&D work to a third party or contributes to a project with a university or research organisation.

Process of claiming R&D tax credits

1. Identify eligible projects: Review your projects to determine which activities qualify as R&D. Look for efforts that involve scientific or technological advancements and uncertainties.

2. Gather documentation: Collect relevant records, including project descriptions, financial statementsand detailed accounts of R&D expenditures. This documentation will support your claim.

3. Calculate qualifying expenditure: Identify and calculate all eligible costs related to your R&D activities. This includes staff wages, materials, software and subcontractor expenses.

4. Complete the R&D claim form: Fill out the necessary forms, typically included in your Corporation Tax Return. This will include a summary of your R&D activities and the associated costs.

5. Submit your claim: Submit your completed Corporation Tax Return along with the R&D claim form to HM Revenue and Customs (HMRC). Ensure that all information is accurate and complete.

6. Respond to HMRC queries: Be prepared to answer any questions from HMRC regarding your claim. They may request additional information or clarification.

7. Receive your credit: Once approved, you will receive your R&D Tax Credit, which can reduce your tax liability or provide a cash refund.

What are the R&D tax deadlines?

• Process of claiming R&D tax credits

You should notify HMRC of an upcoming R&D Tax Credit claim as soon as you identify qualifying R&D activities and expenses. It’s advisable to inform them before submitting your Corporation Tax Return, ideally within the same accounting period when the R&D work was conducted.

This early notification helps ensure that HMRC is aware of your claim intentions and can provide guidance if needed. While there is no formal requirement to notify HMRC ahead of time, doing so can facilitate a smoother claims process.

Be prepared to provide detailed information about your R&D projects and associated costs when you submit your claim, as this will support your eligibility for the tax credits.

• Deadline for submitting the actual claim

If you're claiming R&D tax relief for the first time or haven't made a claim in the last three years, you must submit a claim notification form before submitting your actual R&D Tax Credit claim. The claim notification window starts on October 1, 2023, and ends on September 30, 2026 (a period of three years).

You must submit the claim notification form within six months after the end of the accounting period in which you incurred the R&D costs. For example, if your accounting period ends on December 31, 2023, you have until June 30, 2024, to submit the notification form.

However, there are exceptions if you've submitted an R&D claim in the three years leading up to the end of the claim notification period. In such cases, you may not need to submit a separate notification form.It's important to note that submitting the claim notification form does not constitute an actual claim. You must still submit your R&D Tax Credit claim within the two-year deadline from the end of the accounting period in which the qualifying R&D activities took place.

What will happen if you miss deadlines for R&D tax?

1. Loss of eligibility: If you miss the two-year deadline for submitting your R&D Tax Credit claim, you will no longer be eligible to receive those credits for that accounting period.

2. No retroactive claims: Once the deadline has passed, you cannot retroactively submit a claim for that period, which means potential financial support will be lost.

3. Limited options for late claims: In rare cases, HMRC may allow late claims if there are exceptional circumstances. However, this is not guaranteed and requires strong justification.

4. Impact on cash flow: Missing the deadline can affect your business’s cash flow, as you may miss out on significant tax relief that could have helped fund ongoing projects.

5. Need for diligence: To avoid missing deadlines, maintain organised records and regularly review your R&D activities. This proactive approach ensures you can claim the credits you deserve.

If you need more information or help regarding R&D tax relief, our team of tax experts can guide you through the complexities of R&D Tax and ensure you comply with all regulations.

Don't wait until it's too late. Contact us today at 0333 2422 572 , email dnstax@dnsaccountants.co.uk ,or book a free consultation . Our friendly experts will be happy to discuss your specific requirements and provide tailored solutions to protect your business and ensure you pay the right amount of tax.

About the author

Siddharth Agarwal
I am a Chartered Tax Advisor (OMB) and ACCA. I have 9+ years of experience in owner-managed business taxation issues, company reorganisations, property taxation, and succession planning. I also work with private clients on bespoke tax planning strategies for trusts, residence status, and non-residents. I aim to fulfil my professional duties towards my clients and keep them satisfied, my utmost priority. I believe in establishing and maintaining businesses and personal relationships as the key to mutual growth.