Upcoming Changes to R&D Tax Credits: Introducing the Additional Information Form

Starting from August 8th, 2023, all companies seeking R&D tax relief must complete and submit an additional information form to HMRC to support their claims. This new requirement applies to all companies and must be fulfilled before submitting the company's corporation tax return. Failure to provide the additional information form will result in the removal of the R&D claim from the tax return. The company itself or an authorised agent acting on behalf of the company can file the new form.

What is the Additional Information Form?

The Additional Information Form becomes a mandatory part of the R&D claim process from August 8th 2023. Prior to this date, most R&D claims were submitted with an R&D claim report. These reports were provided to explain the basis for the R&D claim, and reduce the likelihood of an HMRC enquiry. 

The Additional Information Form acts as a ‘mandatory minimum’ R&D report. It is an online form with pre-set questions that is submitted directly to HMRC. After August 8th, 2023, HMRC will reject any R&D claims where an Additional Information Form wasn’t submitted previously or on the same day as the Company Tax Return.

You can still attach R&D claim reports alongside your corporation tax return, in addition to the additional information form, and this is something our team is still going to recommend, especially for larger claims.

What HMRC now requires in the new Additional Form:

Company Details

When completing the Additional Form, you will need to provide the following company details:

• Unique Taxpayer Reference (UTR): This must match the UTR shown in your Company Tax Return.
• Employer PAYE Reference Number.
• VAT Registration Number.
• Business Type: This refers to your current SIC (Standard Industrial Classification) code.

Contact Details

Include the contact details of the following individuals:

• Main Senior Internal R&D Contact: This should be the person within the company who is responsible for the R&D claim, such as a company director.
• Any Agent Involved in the R&D Claim.
• Accounting Period Dates
• Specify the start and end dates of the accounting period for which you are claiming the tax relief. These dates must match those shown in your Company Tax Return.

Scheme Eligibility

Provide the details of your qualifying expenditure. If you meet the conditions, you can claim tax relief under either or both of the following schemes:

• Small and Medium-sized Enterprise (SME) Scheme: This applies to companies that qualify as SMEs.
• Research and Development Expenditure Credit (RDEC) Scheme: This is applicable to both large companies and SMEs who are otherwise disqualified from the SME scheme.

Qualifying Expenditure Details

On the additional information form, you must include the amount of qualifying expenditure for each project. Types of qualifying expenditure include:

• Staff costs
• Consumables, such as materials or utilities
• Software
• Subcontractor costs
• Externally provided workers
• Payments to participants of a clinical trial
• Contributions to independent R&D costs (RDEC only)
• Cloud computing costs, including storage (accounting periods beginning on or after 1 April 2023 only)
• Data license costs (accounting periods beginning on or after 1 April 2023 only)

Qualifying Indirect Activities

Qualifying expenditure on activities that aren’t specifically related to resolving the technical uncertainty in your R&D project are called ‘qualifying indirect activities.’ The full list of Qualifying Indirect Activities can be found here. The Additional Information Form will require you to specify how much of each cost category is made up of Qualifying Indirect Activities. 

Project Details

Specify the number of projects you are claiming for during the accounting period, and provide details for each project. The requirements are as follows:

• If claiming for 1 to 3 projects, describe all the projects covering 100% of the qualifying expenditure.
• If claiming for 4 to 10 projects, describe those projects that account for at least 50% of the total expenditure, with a minimum of 3 projects described.
• If claiming for 11 to 100 (or more) projects, describe those projects that account for at least 50% of the total expenditure, with a minimum of 3 projects described. If the qualifying expenditure is distributed among multiple smaller projects, describe the 10 largest projects.

You’ll need to answer 6 questions for each project:

1. What is the main field of science or technology
2. What was the baseline level of science or technology that the company planned to advance
3. What advance in that scientific or technological knowledge did the company aim to achieve
4. The scientific or technological uncertainties that the company faced
5. How did your project seek to overcome these uncertainties
6. Which tax relief you’re claiming for and the amount

These changes aim to streamline the R&D tax relief process and ensure accurate reporting. By submitting the required information through the Additional Form, companies can enhance the quality of their claims and minimize the risk of HMRC inquiries.

How to submit your additional information form?

After completing the additional information form, it's important to note that you won't have access to the submitted information anymore. To ensure you have a record for future reference when submitting your R&D Tax Credit claim, we recommend keeping a separate copy of the form. Remember, the details provided in the additional information form must align with the information in your R&D claim application.

• You will need the Government Gateway user ID and password that you used during your Corporation Tax registration.
• If you don't have a user ID, you can create one the first time you sign in.
• Click here to submit the additional information form.

Once you've submitted the form, you will receive an email confirming its receipt, including a reference number. 

By following these steps and submitting the form accurately, you can ensure a smooth process and maintain a record of your R&D tax relief claim.

How is Zest R&D preparing for the Additional Information Form?

While the Additional Information Form is a significant change to R&D tax relief, the team at Zest R&D have been working behind the scenes to make sure our clients are ready for the changes, having already submitted multiple claims with the additional information form.

As a result, we can cater to the latest requirements, and we continue to update our data collection methodologies to ensure we submit R&D claims that are compliant and optimised in accordance with the changes coming on 8 August 2023.