Businesses could potentially miss vital R&D tax relief – claim

Tens of thousands of businesses could potentially miss out on vital research and development (R&D) tax relief, according to a tax expert.

Any newly formed innovative business wishing to make a claim for R&D tax relief has just six months from the end of its financial year to act.

Stuart Bentley (pictured), tax director at Azets, the UK top ten accountancy and advisory firm, said: “As we head towards the end of September, the six-month deadline is looming for any company with an April year-end that is wanting to make an R&D tax credit claim for the first time.”

The change to regulation from HM Revenue & Customs (HMRC) is hoped to clamp down on the abuse of the system, prevent frivolous claims and halt the activities of unregulated R&D consultancies.

New regulations were introduced from April 1 2023, meaning many businesses with year-end March 31 2024 have only until the end of September to register, however, once a claim is registered, businesses have up to two years to submit the detailed claim.

Mr Bentley continued: “Businesses need to be very careful about getting the administration of any tax relief claims organised at an early stage or they could find themselves unable to access generous tax relief sometimes worth more than 20 per cent of the R&D spend.

“It’s critical that businesses take the right advice and are aware of the full range of measures being introduced as those missing the notification deadline lose the right to claim for the financial year in question.”

The changes apply to companies who are claiming for the first time or who have not made a claim in more than three years. The total support claimed through the UK’s two R&D schemes for the tax year 2021 to 2022 is estimated to be £7.6 billion – an increase of 11 per cent on the previous year’s total.