How far back can I claim R&D tax credits?
UK companies can make an R&D tax credit claim up to two years from the end of the accounting period. For example, a company with an accounting period ending 31st December 2024 can claim for work done in this year until midnight, 31st December 2026.
You can claim for R&D tax relief even if you’ve already submitted your corporation tax return; you will need to submit an amended tax return within the deadline to make your claim.
Usually, this means that companies can claim for the two preceding accounting periods. There is no requirement to claim for the periods in order. However, we recommend making your claim for the earliest period first, as it becomes harder to remember the details for the period the longer you wait.
If you’re a first-time claimant or it’s been more than 3 years since you made a claim, you may need to notify HMRC earlier if you intend to make a claim.
I have never claimed before, is there anything I need to do?
Yes—companies will need to inform HMRC in advance that they plan to make a claim. They will need to do this using a digital service within six months of the end of the period to which the claim relates.
Speak to an advisor as soon as possible to determine whether you are eligible and ensure your pre-notification is made within the timeframe.
First-time claimants can also use HMRC’s advanced assurance process to get clarity from HMRC whether their projects claim.
I’m worried my R&D tax claim may be late. If so, what will happen?
If you make a claim for R&D tax relief after the two-year deadline from the end of your accounting period, you might be able to still access your benefit. The success of these appeals depends on the facts of the case; however, it is very rare that HMRC will allow a late claim based on insufficient time or not being aware of the R&D tax relief scheme.
HMRC will follow their Statement of Practice SP 05/01 guidance to deal with late claims. HMRC presents two examples which may result in the claim being accepted, assuming this was “beyond the company’s control”:
“At the date of the expiry of the time limit, the company or its agents were unaware of profits against which the company could claim relief.”
“The amount of a profit or loss depended on discussions with an inspector which were not complete when the time limit expired, and the delay in agreeing on figures is not substantially the fault of the company or its agents.”
Will HMRC want to look at my company’s wider general tax affairs if I make a claim for R&D tax credits?
When you claim R&D tax relief, one of the HMRC's R&D specialist units will review and process it. It is standard practice for an inspector at the HMRC R&D unit to review the first claim that is made by a business. If the inspector has any questions relating to the claim, then they will make an enquiry, which is usually done by writing to the company.
These enquiries are usually contained to the single year being investigated. However, it is possible that HMRC may look at multiple claims. In cases where fraud is suspected, HMRC reserves the right to open a larger audit of the company’s general tax affairs.
To prepare a strong claim that is more likely to withstand an enquiry, we strongly advise that a claim is supported by a detailed report outlining the technical advancement and uncertainties and providing a detailed breakdown of the eligible R&D costs.
Using a reputable R&D tax advisor to help prepare and submit your claim will show HMRC that your claim was made with a considered approach and is less likely to be suspected for fraud or error.
What if the research and development work that my company carried out is subcontracted to us?
In general, companies cannot claim for work that they did on behalf of another company, as they did not take on any financial risk by doing this work.
There is one exception to this rule: SMEs that do R&D on behalf of a large company cannot claim these projects through the SME scheme, but they can claim them through the RDEC scheme. This is because large companies cannot claim for subcontracted costs through the RDEC scheme, so there is no risk of two companies claiming for the same work.
What if some of the R&D expenditure has been funded by a grant or subsidy?
As with subcontracted projects, companies cannot claim for these projects under the SME scheme. However, these projects are eligible under the RDEC scheme. You should split out any costs that are funded by grants or subsidies.
Once submitted, how long will HMRC take to process my R&D tax credits claim?
HMRC works to process applications for R&D tax credits within 40 working days (increased from the previous 28 days expected). However, the processing time required for HMRC to review and consider an R&D tax credit claim depends mainly on the nature of the claim and the complexity of a company’s structure and accounting.
The time of year can make a difference, with peak accounting times such as March and December being particularly busy, resulting in slower processing times.
HMRC processing the claim does not necessarily mean that the claim will not be investigated further; some compliance checks have been opened following the company receiving their benefit.
Which roles can be included in an R&D tax credit claim?
People from all over a business are likely to play their part in an R&D project. Therefore, your R&D team could include an R&D Manager, a Lead Developer, Project Co-ordinators, Engineers, CAD Engineers, Cost Accountants, Quality Control and Testing specialists, as well as members of the senior management team.
We’re an SME with a small project. Is it worth us claiming R&D tax credits?
Absolutely! In fact, the Tax Cloud portal was designed exactly for smaller businesses representing excellent value for money.
Check out our R&D tax credit calculator to work out your claim value and our fees.
How many users can I add per claim?
You can add an unlimited number of users to your account. You can also limit access to just the technical sections so the people who actually worked on the R&D can enter the details of the projects themselves without visibility of financial data or costs.
How do I sign up?
To sign up, simply go to our sign-up page and enter your company information. This will be checked against HMRC’s Company House data. Our team will reach out to confirm your eligibility for R&D tax credits and finalise your registration.
