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Key questions about R&D Tax Credit Claims and deadlines

This article examines the key timelines for making R&D claims from HMRC and addresses questions relating go deadline extensions, penalties for missed deadlines, Covid-19 and cash flow management. Read on to find out more.
What are the deadlines for making a Tax Credit Claim for R&D companies?

An R&D Tax Credit or Relief Claim is made through a company’s tax return, which is known as the CT600. The filing and amendment deadlines are thus the same as the CT600 deadlines.

All Corporation Taxes are due for payment within 9 months and 1 day of the end of the accounting period.

The only thing that is necessary for R&D companies during this time is to pay all the taxes due. However, most profitable companies also file their tax returns at the same time since they need to calculate the taxes that are due anyway.

The final deadline for the filing of tax returns is one year after the end of the accounting period.

The deadline for company tax return amendments is two years after the end of the accounting period. This is also the absolute deadline for R&D claims for the accounting period in question.

Do HMRC extend deadlines if companies miss the two-year deadline to make R&D claims?

It is extremely unlikely for HMRC to extend deadlines for companies that miss the two-year deadline to make R&D claims. Only under very special circumstances would they accept any returns after the date of this final deadline.

Examples of such exceptions would be:

  • an accountant falling ill on the day he or she was due to file a claim
  • a massive software glitch or technical breakdown
  • power outages on the final day of filing

Such exceptions are assessed on a case by case basis and require supporting evidence. HMRC does not grant deadline extensions due to workload.

Fortunately, two years should be sufficient to prepare a claim for practically any R&D company. If the option to make R&D tax claims is only learnt of after the deadline for an accounting period, any claims for that period will be forfeited by the company in question.

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Have any of the R&D Tax Credit filing deadlines changed due to the Covid-19 crisis?

None of the corporation tax deadlines were extended due to Covid-19. The only deadline related to the tax return was the obligation to file accounts at Companies House within 9 months of the end of the accounting period. However, this deadline is not a tax or HMRC deadline.

What happens if a company misses an R&D Tax Credit Claim deadline?

R&D companies that miss the deadline to pay Corporation Tax or file company tax returns will be fined by HMRC.

If an R&D company misses the two-year claim deadline, regardless of whether it is through an initial or an amended tax return, they could incur even greater losses. The average national tax benefit is £60,000 so missing that deadline could mean forfeiting the opportunity to claim back a significant amount of cash.

How soon after the end of an accounting period should a company claim R&D Tax Credits/Relief?

The cash flow of the R&D company in question is the primary consideration in this regard:

A claim for an R&D Tax Credit or payable RDEC should be made as soon as possible after the end of the accounting period. Once a return, which includes an R&D Tax Credit Claim, is filed, HMRC will pay it within 28 days in 95% of cases. Sometimes payments are processed even more quickly.

If a company decides to make an R&D tax claim which results in either a corporation tax repayment or an R&D Tax Credit (or a combination of both), then the claim should be made as soon as possible.

What is considered poor cash flow management with regard to R&D Tax Credit/Relief claims?

Deadlines can be risky as some entities often aim to meet them just in time.

For this reason, some R&D companies make their Tax Credit Claims claim very close to the end of the 2-year deadline. This is not an ideal approach as it means that such companies are leaving their money with HMRC for up to 15 months longer than is necessary.

In the event that an R&D company aims to make their Tax Credit Claim at the end of the 2-year deadline, it could occur that they are not able to do so due to unforeseen events or workloads in the last few days preceding the deadline. In such cases, HMRC will not consider excuses or justifications for missed deadlines.

It just isn’t worth the risk to wait until the last minute to claim your R&D Tax Credits. Fortunately, most R&D companies avoid last-minute claims and endeavour to take advantage of their tax benefits as soon as possible.

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