How do I submit my HMRC R&D Claim?

How do I submit my HMRC R&D claim?

As a business who has eligible R&D expenditure to claim under either the SME or RDEC scheme (or both), you will have calculated your eligible R&D expenditure; but how do these numbers actually generate you a tax or payable credit? Below we explore the required documentation for an HMRC R&D Claim, calculations involved, what benefit you will receive and how this can be used in your accounts.

HMRC accounts submission documentation

The documents below are used to submit your company’s statutory financial data to HMRC and reflect the R&D Tax Credits: 

• Accounts – typically prepared by your accountant and depending on the size of your business can be Micro, Abridged or Full accounts.  
• The Tax Computation is a statement showing the breakdown in tax for the accounting period. It shows how the tax has been derived after allowances for items such as Capital Allowances, R&D Tax Credits. 
• CT600 – A standard format document to file your Company Tax Return completed annually by ALL companies. It has sections dedicated to entry of SME and RDEC claim details – Corporation Tax for Company Tax Return (CT600 (2021) Version 3) – GOV.UK (www.gov.uk) 
• CT600L – From 1st April 2021 there is now a new supplementary page to submit as part of a R&D Tax Credits claim. Corporation Tax: research and development (CT600L (2021) version 3) – GOV.UK (www.gov.uk) 

• R&D technical report – Specifically to explain to HMRC why the R&D projects you have included in the R&D claim are themselves evidenced and meet the criteria of being R&D. 

All of the above, apart from the technical report, are typically prepared by your accountant, and along with the technical report as an attachment, are submitted electronically through their software to HMRC. This is how you submit your R&D claim to HMRC.   

R&D Tax Credits SME Scheme

With the SME scheme there will be a value of eligible expenditure related to costs incurred whilst undertaking your R&D projects. For the sake of argument let’s take a simple example of £100,000 of eligible R&D costs. This generates two numbers that are used in the HMRC submission: 

• Uplifted eligible spend @ 130% of the eligible expenditure = £130,000 
• Enhanced eligible spend @ 230% of the eligible expenditure = £230,000 

The tax liability is calculated in the Tax Computation and the Uplifted and Enhanced numbers are recorded into the CT600 and CT600L forms. The benefit for an SME based on this example can vary according to your profitability: 

• Profitable  £24,700 
• Breakeven £18,850 
• Loss making £33,350 

The average R&D claim benefit for an SME per year is £57,000!! 

R&D Tax Credits RDEC Scheme

A value of eligible expenditure related to your R&D projects which can include: 

• Large Company R&D projects 
• SME R&D projects subsidised by grants 
• SME R&D projects contracted to by a Large Enterprise 

There is a seven step RDEC process by which the RDEC eligible spend is adjusted, relating to Corporation Tax rates (currently 19%), the RDEC rate for the period (currently 13%), direct R&D workers PAYE/NIC, outstanding Corporation Tax liabilities and other HMRC liabilities. The seven step process calculation is detailed in the Tax Computation, with resulting numbers being used into the CT600 and CT600L forms. 

A claim for £100,000 of eligible spend, would generate a specific benefit of £10,530 if there were no restrictions on PAYE/NICs and HMRC liabilities.  

The Benefit of an HMRC R&D Claim

Once HMRC has received your accounts submission, one of three things can happen: 

• You pay less Corporation Tax 
• You receive a cash payment from HMRC for your R&D claim 

• You offset losses carried forward or back for profits in other years 

Companies House documentation for an HMRC R&D Claim

There is also the separate requirement to submit accounts to Companies House within nine months of a year end. Of all the documents above, only the Accounts will feature on the Companies House website. The rest are confidential and are not publicly available, thus any cost associated with R&D projects and the sensitive technical detail in the report remain confidential. 

If you’re looking for additional help with your R&D Tax Credits claim, please contact us.