As of 1st April 2019, a new HMRC R&D Tax Credit rule came into force. Your R&D Tax Credit claim must now be submitted with an accurately completed CT600 and full Corporation Tax computations.

Why has HMRC implemented this new R&D Tax Credit rule?

Recently, HMRC are increasingly industrious in their attempts to clarify the R&D tax relief claims system. They aim to uphold the intended purpose of the tax relief – “to encourage scientific and technological innovation within the United Kingdom.”

It is, in essence, a Corporation Tax relief and HMRC are trying to reduce the amount of mistakes being made during the process. ‘Incomplete’ information, or missing facts, end up prolonging administration procedures. If HMRC need to contact you or your agent to clarify something or locate essential facts, your eventual R&D tax relief payment is going to be delayed. This is why correctly identifying your R&D activities and qualifying costs is so important.

Sometimes the correct authorities have not been granted to a business’s R&D tax credit specialist and they actually are not officially allowed to alter the CT600 in question. There have been several other instances where a company’s usual accountant and their R&D tax expert have not worked together effectively, resulting in mistakes on their Corporation Tax Return self assessments.

Any of these issues risk an out and out rejection of your R&D Tax Credit claim by HMRC.

By insisting on a CT600 with full computation at the point of submission, HMRC hope to eliminate a large proportion of these frequent mistakes and ensure that more companies receive the R&D Tax Credits they are entitled to.

How else is HMRC supporting companies claiming R&D Tax Credits?

HMRC have a new online service for submitting R&D Tax Credit claims. They have also issued new Guidance specifically for claims involving software qualifying costs. In order to prevent further tax evasion through abuse of the scheme, a cap on loss making SMEs’ claims has been reintroduced. There is now an R&D Tax Credit claim ceiling of three times a company’s annual NICs and PAYE total.

What are the consequences of not following this new CT600 R&D Tax Credit rule?

HMRC have declared a transitional period until 30th June 2019, in order for the new rule to become embedded in the R&D Tax Credit process. Up until this date, if you’ve not included a CT600 and Corporation Tax computation, your claim will be rejected but you will have 30 days to re-submit with everything present and correct. After June 30th, it will simply be rejected.

Obviously, as R&D tax experts, we are fully up to date with all of HMRC’s requirements and nimbly adjust our procedures to ensure the most efficient process for our clients.


Jamie Smith