A common question about R&D tax for businesses is how far back they are able to make a claim. Knowing the time period for which you are still eligible to claim R&D Tax Credits can determine whether or not you are eligible to claim back thousands of pounds.
Due to the nature of R&D claims having the ability to be backdated, it is often something that is overlooked by many businesses. However, when they understand the terms, many end up with more money than anticipated.
In this article, we aim to give you more clarity around the question of how far back your business is able to claim R&D Tax Credits and other important things to consider when making the claim.
The HMRC will allow businesses to apply for R&D Tax Credits for up to 24 months after the end of the innovative project’s accounting period. Additionally, they still allow for the application to be made by those who have already filed their corporate tax return. In fact, it is recommended to claim by submitting an amendment.
For example: let’s say you conducted qualifying R&D between May and November 2020 and your financial year ended in December 2020. Your application deadline would be December 2022.
Even if you have already filled the Corporation Tax return for the period, the HMRC has allowed companies to apply for Tax Credits retrospectively. Although, usually applications are made alongside the yearly tax return. It is important to remember to submit your R&D Tax Credit claims for any qualifying expenditure that has been incurred during that accounting period.
However, as long as you are within your permitted time limit, you can amend your tax return. In fact, it is often recommended to businesses that they submit an R&D tax credit claim via the amendments of their CT600. It speeds up the HMRC process for the claim, leaving you with receiving the money a lot quicker. This is due to it being processed by the R&D Tax Credit Officer who has a better understanding of the applications.
The date on which your business is registered with Companies House becomes your incorporation date. This is what becomes your default registration date. Meaning that this is the date on which your 12 month accounting period begins. However, if this is not convenient for you, you may move your accounting year to another date. The R&D tax credit deadline will always be 24 months from the end of each accounting period.
If your R&D project started prior to the 24-month deadline and the project continues to be ongoing, you are still able to make a claim. If there are qualifying expenditures on the R&D activity for the last two accounting periods, your project is still eligible for a claim. This is regardless of when the project started.
How much you can claim depends on whether you are an Large Company or SME.
Both the SME R&D and RDEC offer the corporate tax relief claiming window to being 24 months.
The HMRC aims to process the claims within 28 days. However, it may take up to 90 days to process the claims and an additional 10 to transfer the money.
If you have any questions about your claim or general questions regarding R&D Tax Credits, please feel free to contact us here.