R&D tax relief: examining a claim: common errors
You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.
Some of the common errors made in R&D tax relief claims are:
- Project activities outside the scope of R&D for tax purposes are included in the claim.
- Expenditure outside the qualifying categories is claimed CIRD82000.
- Staffing costs are claimed in respect of people who are not employees of the company CIRD83000. (However, consider whether the expenditure qualifies as expenditure on externally provided workers CIRD84000.)
- Claims are made in respect of overheads that do not qualify as consumable items CIRD82300 or consumable stores CIRD82450.
- Expenditure is claimed on a particular item for a period before it was in a qualifying category CIRD98900.
- Special rules for connected parties are not applied CIRD82150.
- Companies do not recognise they are not SMEs CIRD91100.
- SME’s failing to make claims under the Large Company Scheme CIRD90050.
For the SME scheme only:
- A loss previously surrendered for a payable tax credit is carried forward CIRD90500.
- Unconnected subcontractor expenses are not restricted to 65% CIRD84200.
- The PAYE & NIC liability for the period in respect of employees of the company is less than the payable tax credit claimCIRD90500. This restriction is removed for accounting periods ending on or after 1 April 2012
- The amount of surrenderable loss for the purposes of the payable tax credit is not restricted to 150%, or 175% from 1 August 2008, or 200% from 1 April 2011 or 225% from 1 April 2012, or 230% from 1 April 2015 of qualifying expenditure CIRD90500.
- A payable tax credit claim is made for expenditure that only qualifies under the large company scheme CIRD90500.
- No account is taken of subsidies or Notified State Aid - CIRD81650 and CIRD81670.