Knowing when you can make an R&D tax claim can be quite complicated. To help, we answer below 7 the most common questions we get asked at Claimer.
1. When can my company make an R&D claim?
You can make a claim the day immediately after (and up to two years after) the end of your accounting period.
2. What is an accounting period?
This is the period for which your books are balanced and the financial statements are prepared, i.e. the period that you have reported the financial performance of your business to Companies House. Most accounting periods are a year long.
You can see your last accounting period by going on the Companies House website, and look under 'Accounts'. (To note, where you have just gone through your first financial year, your 'first accounts' will be the end of your last accounting period.)
3. What period does the R&D claim cover?
The R&D claim covers expenses that are invoiced during your accounting period.
If an expense is invoiced in one accounting period but paid in another, it will generally be included in the accounting period it was invoiced in.
Love Island Ltd has an accounting period that ended 31 December 2018. Love Island Ltd receives an invoice (for R&D related services) from a subcontractor dated 28 December 2018. The invoice is paid on 3 January 2019. For R&D claims purposes, the expense will be treated as part of Love Island Ltd’s claim for the accounting period ended 31 December 2018.
4. Can I claim for previous accounting periods?
You can normally claim for two periods at any time, your last accounting period and the accounting period before that.
5. Can I claim for my current accounting period?
You can only claim for accounting periods that are finished.
Theoretically, you can shorten your accounting period. However doing this may make it more likely HMRC will investigate your R&D claim. It would also increase the amount of admin you would need to do, as you need to prepare a set of accounts and tax return for each period.
6. Can I submit my claim before I submit any other information?
You need to have your statutory accounts and company tax return prepared.
If you have an accountant, they will usually take care of this for you. If you want to submit your claim soon after your year-end, make sure your accountant is working with you to meet this deadline otherwise there may be delays.
7. How long does it take for HMRC to pay my tax credit?
HMRC says the aim to pay within 28 days, however, our experience in practice is that it can vary from as quick as 7 days to considerably longer than 28 days. (As of July 2019, we are aware that HMRC is working through a backlog that has created delays.)
Every company we work with is unique and the answers above are only a starting point. If you would like to further discuss or have specific questions relating to your company, please contact us at [email protected] or start a chat with our team by clicking on the icon on the bottom right corner on our website.