Commencing 8 August 2023, any company filing an R&D tax credit claim must access the government gateway and complete Additional R&D Information (AIF). This is an additional step to filing the R&D claim on the CT600. If the AIF is not completed, the R&D claim will not be processed and the CT600 R&D tax relief claim will be invalid.

HMRC reports that between 8 August 2023 and 3 September 2023, only half of companies filed the AIF. HMRC is now writing to these companies to tell them that their R&D claim is invalid and advise what they need to do to make a valid R&D tax credit claim.

The AIF is obviously an important step. Many R&D claims are now unduly delayed when the AIF is not completed.

What is the AIF?

The AIF required to be completed must be done online through the government gateway portal. This information is an extension and essentially requires a company to describe their R&D projects in detail. Which also needs to explain how and why the R&D project meets the R&D eligibility criteria.

The reason for this step is that HMRC believes that up to 50% of SME R&D claims are non-compliant and do not meet the eligibility criteria. HMRC now requires more detail on each R&D claim in order to further scrutinize the R&D claim. In fact they have hired another 300 inspectors to query R&D claims.

R&D Claim Filing Requirements

Many companies have difficulty completing the AIF. One reason is that the eligibility criteria can seem vague. For example, many competent professionals within a company struggle with the concept of “technological uncertainty”.

This criterion is very important as it is the technological uncertainty that:

  1. Starts an R&D project (when the technological uncertainty is encountered);
  2. Ends the project when it is resolved; and
  3. Creates the technological advance as a result of either resolving the uncertainty or not.

As HMRC continues to increase its compliance checks of R&D claims, it is likely that any company filing an R&D tax credit claim will be “reviewed” at some stage. HMRC is currently taking a very hard line on what qualifies as an eligible R&D project.

What should you do next?

This is where RDP Associates Inc. (“RDP”) comes in. We anticipated this situation would occur. We work in other countries with similar R&D programs that carry out harsh reviews of R&D claims. So, our technical staff of software specialists, engineers and PhD’s have experience dealing with the tax authority’s review of R&D claims. In fact, many other tax regimes employ their own technical staff who challenge the R&D claims. So that our staff go head-to-head with their peers to justify our client’s R&D claim.

RDP’s knowledge and experience are now necessary to prepare and support a company’s R&D tax credit claim.

If you would like to discuss our capabilities, service, and fees, please do not hesitate to contact the team today on 0208 214 1341 or email Jenni on [email protected].