The Government has announced changes to R&D tax credits with requirements to go digital.
From 1 April next year (2023), applications for all R&D reliefs, either for a deduction or a tax credit, must be made online as well as pre-registration of claims, regardless of the size of the business.
HMRC estimates that around 90,000 companies will benefit from the changes, while the cost of the Treasury will be confirmed in this autumn’s Budget.
These changes will affect companies that carry out research and development and claim Research and Development (R&D) Tax Relief under either of two schemes — the Research and Development Expenditure Credit (RDEC) and the small or medium enterprises (SME) R&D relief.
It is also likely to affect some companies electing into a Patent Box regime.
Making claims digitally is part of the effort to tackle abuse in the system says HMRC and the tax authority requires details on what expenditure the claim covers, the nature of the advance and the field of science or technology.
The digital claims, which need to be endorsed by a named senior officer of the company, will have to break down the costs and provide a brief description of the R&D.
If firms are planning to make a claim, HMRC needs to be informed in advance using a digital service and details within the claim will need to include any agent who has been involved.
The new rules mean the current time limit for making a claim of 12 months from the statutory filing date, will be extended to two years and HMRC says that businesses growing and transitioning from the SME scheme to RDEC will be protected for 12 months.
This is where an SME within a group exceeds the size thresholds for an SME, so in this case, all companies in the group will retain SME status for one year afterwards.
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