Introduction
It is important to know what information HMRC require to process your R&D tax claim.
HMRC require specific information about your R&D tax claim. HMRC do not have a preferable format. As a bare minimum they want details of your company, the innovation, why it qualifies, the challenges and the qualifying costs. The costs are then reflected in the tax documents.
As there is no format, there is no template and this is how we prepare our R&D claims.
The abobe information can be prepared using four documents as follows:
- technical report
- the financial details
- CT600
- tax computation
Technical Report
The technical report can be broken into 6 sections.
- Overall summary of the business
Includes what the business does, why it operates, which sector it operates, details of the founders of the company and a story behind the company.
These details can usually be found on the website on the ‘about us’ page.
- Context of the whole claim.
Information about the day-to-day activities of the business and a summary of the R&D projects. This includes the explanation of any areas that we deem an additional risk.
For example, we would include information about connected subcontractors and how we calculated the qualifying R&D costs.
- SME or RDEC
We establish whether the claim is under the SME rules or RDEC.
We include details of any linked entities, partner entities, total employees, total turnover, total gross assets and details of any grants, funding and subsidies.
- Advancement in science or technology
Details of the project including the:
- baseline in technology
- the advance sought
- a comparison to the baseline
- a link to the HMRC’s guidelines so HMRC know which type of advance was sought.
- Scientific or technological uncertainties
Details of the scientific and/or technological uncertainties and how these were overcome.
- Competent Professional
Information including why the project was not readily deducible by a competent professional.
Financial details
Eligible R&D expenditure includes:
- Staffing
- Consumables
- Subcontractors
- Externally Provided Workers (EPWs)
- Software
- Volunteers for clinical trials
These costs are put together into a cost schedule and are used to complete the CT600 and tax computation.
To support the staff cost section, we include details about the employees to include:
- what they contributed to the R&D project
- their experience including details of their qualifications
- information of the competent professionals
CT600
The costs in the cost schedule are uplifted by 230% and included in the CT600 and the R&D section should be completed.
If the R&D claim has resulted in a refund of corporation tax or payable R&D tax credits, bank details should be included.
A supplementary CT600L form should be completed. In most cases, the software will pull through the information required to complete this form. You may need to include PAYE/NIC details due to the changes in
Tax Computation
The costs in the cost schedule are uplifted by 130% and included in the tax computation.
The treatment of R&D losses will need to be included so HMRC know whether you are surrendering losses for payable R&D tax credits, carrying losses forwards, carrying losses backwards or using under group relief.
Submission
Once all the details above have been prepared, the whole claim is submitted to HMRC. We like to attach the accounts so HMRC has all the necessary information in one place.
