Deadlines. The dreaded word when it comes to R&D Tax Credit claims. We’ve often been in the position where a client has come to us 24 hours before the HMRC deadline and we’ve still managed to pull together all the relevant information and file. What do you do, though, if you know you cannot make the HMRC deadline? We are often asked “what are the time constraints surrounding the claim?”. It is one of the most important aspects surrounding the process (who wants to spend time filing an application only to find out it was submitted late?) so we’ve outlined the deadlines, why they are important, the consequences of missing them and how to use protective claims.
The process and time constraints
The deadline for filing company accounts is 9 months from the end of your financial year. The R&D Tax Credit scheme (both large company and SME) is more generous, granting a company 2 years from the end of your financial year to file a tax credit claim. So you’re able to claim an R&D Tax Credit on your year end March 2015, up until March 2017.
That’s a pretty generous window for submitting your claim, but the implications of missing this window are slightly different to filing your accounts late. If you don’t file your accounts on time, you’ll be subject to being fined by HMRC (full details of penalties here), however if you miss the R&D Tax Credit claim submission deadline, you can never recover R&D expenditure for that period.
If you know you can’t meet the deadline date and believe you’re experiencing extenuating circumstances, it’s possible to file what HMRC call a ‘protective claim’. There are stringent conditions for protective claims:
- You must file with at least an estimate claim size (calculations for your claim size, along with an amended CT600 and amended tax computations).
- The claim size, upon completing the full submission, must not increase (it can decrease).
- Protective Claims go to a late-claim team, where a HMRC inspector may allow the claim at their discretion.
GrantTree claims are always made up of the following 4 key items:
- Technical Narrative
- Financial Calculations
- Amended CT600
- Amended Tax Computations
You’ll notice that the key difference between the requirements for a protective claim a comprehensive, on-time claim is the technical narrative (sometimes called a technical/R&D report), which is key for substantiating your R&D expenditure – The longer your ‘protective claim’ is with HMRC without this, the higher the risk of the late claims team not accepting your claim.
Be Safe, Not Sorry
Remember: R&D Tax Credit claims can always be subjected to further investigation even when filled on time, for up to 7 years post-filing – this is at the discretion of the case inspector. GrantTree will always advise, encourage, and work with clients to ensure we file a quality claim on time.
Whilst ‘extenuating circumstances’ make it possible to claim tax credits post-deadline, the prerequisites are stringent, and the risk is increased, so only do it if there is a genuine reason you could not make the deadline.
If you have any questions about the time constraints surrounding your claim, or your eligibility for R&D Tax Credits, email us at firstname.lastname@example.org or call us on 020 774 88 999.