As HMRC continues to strengthen its compliance approach to R&D tax relief, many companies are focusing on producing robust technical narratives and accurate financial calculations. However, one procedural error can jeopardise an otherwise legitimate claim before HMRC even considers its technical merits. Through submitting the business’ tax return (CT600) before the Additional Information Form (AIF), can lead to a reject of the entire R&D claim.
The Additional Information Form (AIF) Is Mandatory
For R&D claims made on or after 8 August 2023, the AIF is a mandatory part of the claims process. Its purpose is to provide HMRC with prescribed information about the claim, including details of the R&D projects undertaken, qualifying expenditure and the individuals responsible for the submission. While many companies are aware that an AIF is required, it is critical the order in which it is submitted.
The Order You Submit Your R&D Claim Matters
HMRC requires the AIF to be submitted before the CT600 containing the R&D claim. Where both are submitted on the same day, the AIF must still be submitted first. Under paragraph 83EA of Schedule 18 to the Finance Act 1998, the prescribed additional information must be provided on or before the date the claim is made. HMRC’s guidance at CIRD182000 confirms that, where the required information is not provided within this timeframe, the claim is invalid. Therefore, if a company submits its Corporation Tax Return before the AIF, HMRC will reject the R&D claim. Although the position may be corrected by submitting the AIF and amending the return, this will only be possible where the relevant statutory time limit has not expired.
This sequencing requirement is often overlooked because businesses naturally assume that supporting information can be provided after filing the tax return. While this may apply to certain aspects of corporation tax compliance, it is not the case for R&D tax relief. The AIF is not supplementary evidence that can simply follow the CT600, it forms part of the statutory claims process and should be completed before the Corporation Tax Return is submitted.
An example of where an issue may arise is an accountant may file the CT600 to meet the filing deadline, assuming the R&D adviser will submit the AIF afterwards. Alternatively, companies preparing claims internally may simply be unaware of the sequencing rules. In both cases, a straightforward administrative oversight can place an otherwise valid claim at risk.
How to Avoid Your R&D Claim Being Rejected
To avoid this, companies should ensure that the AIF is submitted successfully and that HMRC’s acknowledgement has been received before authorising submission of the CT600 containing the R&D claim. Where multiple advisers are involved, responsibilities and submission timings should be agreed well in advance to ensure the process is coordinated correctly. Waiting until the filing deadline significantly increases the likelihood of avoidable procedural errors. Ensuring the AIF is submitted in the correct sequence is a simple but essential step that can help protect a company’s entitlement to R&D tax relief.
How We Can Help
Further information and guidance can be found using the link below to HMRC’s guidance.
Please speak to one of our R&D tax specialists, who have extensive experience in preparing and defending R&D tax relief claims. Our team comprises tax and compliance specialists who have engaged directly with HMRC and the CIOT on R&D tax guidance. If you would like to discuss the Additional Information Form, the R&D claims process or any of Streets’ R&D tax services, please arrange a meeting with our team using the link below.
