You already know that you need to define your R&D activity, have a ‘technical expert’ opinion and be able to evidence your qualifying costs. But are you also aware that how you submit your R&D claim affects the smoothness of the process?
You have two options for submitting your R&D Tax Credit claim:
- Include it in your tax return upon initial submission
- Create an amendment to your tax return after it is already filed
For maximum speed and efficiency, it is best to go with option two.
Why use an R&D Tax Credit amendment?
You must have your R&D Tax Credit claim amounts on your CT600 form in order for it to be a valid claim. Tax returns are the combination of the CT600 and your Corporation Tax Return computation.
When you submit your tax return it arrives at a general HMRC office for processing. The staff here are not R&D Tax Credit specialists and, given only 10% of eligible businesses actually apply for their R&D Tax Credits, they rarely come across an R&D Tax Credit claim figure. It just isn’t a usual part of their administration procedure.
Why does this affect the efficiency of my R&D Tax Credit claim?
As with anything unfamiliar in an official setting, there are queries. They are just doing their due diligence to make sure your overall tax return all adds up correctly. But letters, phone calls and even in person meetings all take time. To put it bluntly, this just makes getting your R&D Tax Credit cheque much more arduous and time consuming. Sometimes resulting in taxpayers having to wait over a year.
What is the best way forward?
The way to avoid this situation is simply to file your CT600 and Corporation Tax computation as you have been and then create an R&D amendment once it has been processed. This paperwork will go directly to HMRC’s R&D department, who will be able to understand you claim immediately and process it a lot quicker.
Am I doing anything wrong by submitting my R&D Tax Credit claim this way?
No, not at all. Your obligation is to file the information that describes your exact tax position on your tax return. Then accurately updating this by creating your R&D Tax Credit amendment is just another option within the available procedures.
Keep all your book keeping and accountancy practices going as they are and just put your R&D figures onto a CT600 amendment in order to submit your R&D Tax Credit claim.