Businesses have seen relatively little challenge to their R&D submissions over recent years as HMRC has struggled to keep up as the number of claims have ballooned. Unfortunately, this has encouraged some businesses to develop a cavalier approach to their claims that has pushed the boundaries of what is claimable. This has not gone unnoticed by HMRC.
One of the key updates HMRC is proposing will insist that someone in the claimant company must endorse each claim. In many cases, this will formalise the existing process. But for businesses that delegate the claim preparation to an advisor, or potentially do not even see the claim as submitted by their advisor, this means someone in the senior leadership team will have to thoroughly understand what has been claimed and why. It may seem like a daunting prospect to get to grips with the extensive legislation and HMRC guidance to sign-off on the submission. Unlike many advisers, we work with you by upskilling your internal team to understand what you are claiming for and submitting, providing you with increased security if HMRC were to challenge.
HMRC is also expecting claimant businesses to provide advance notification that a claim will be submitted no later than six months after the end of the accounting period. This will limit the scope for retrospective claims and companies will need to keep on top of potentially eligible projects to ensure they notify HMRC in time and do not lose out on any benefit. In addition to this notification, HMRC is putting in place the legislation to define requirements for submission documentation, including the need for a a claim report to be provided every year a claim is submitted. These changes will allow HMRC to specify the level of information required to support any claim and to understand where new claims may arise.
I believe this means that the days of submitting a claim with minimal information will be in the past and businesses need to be prepared to create an annual claim report. HMRC has specified what it expects to see in terms of technical documentation, setting out the advances and uncertainties. Going forward, claims will not be paid out unless this information is provided by the claimant company. We can highlight any reporting issues by undertaking a claim health check.