Warning over tax relief deadline
TENS of thousands of businesses could potentially miss out on vital research and development (R&D) tax relief.
New requirements for companies to pre-register an intention to make a claim are starting to have an impact.
Any newly formed innovative business wishing to make a claim for R&D tax relief has just six months from the end of its financial year to act.
The idea behind the HM Revenue & Customs (HMRC) changes is to clamp down on the abuse of the system, prevent frivolous claims and halt the activities of unregulated R&D consultancies.
New regulations were introduced from April 1 last year, meaning many businesses with year end March
31, 2024, only have until the end of September to register.
Once a claim is registered there are still up to two years to submit the actual detailed claim, but businesses missing the notification deadline lose the right to claim for the financial year in question.
The changes apply to companies who are claiming for the first time or who have not made a claim in more than three years.
Nick Woolfe, Azets partner and head of R&D Tax for the south region, said: “This new measure is being overlooked following a suite of R&D tax changes such as merging the two current tax relief schemes, the creation of a new R&D intensive
scheme, and the requirement to provide online information prior to claim submission.
“Businesses need to be very careful about getting the administration of any tax relief claims organised at an early stage or they could find themselves unable to access generous tax relief – sometimes worth more than 20% of the R&D spend.”
Latest HMRC statistics show there
are around 19,000 new applicant companies to the UK R&D schemes each year, not including companies which have not claimed for more than three years.
The total support claimed through the UK’s two R&D schemes for the tax year 2021 to 2022 is estimated to be £7.6 billion – an increase of 11% on the previous year’s total.