R&D tax relief offers a substantial opportunity to engage in research and development activities. By understanding the boundaries of the claim window and planning accordingly, you can fully capitalise on the financial benefits available, driving innovation and your business’ advancement.
What is the R&D tax deadline?
In the UK, the deadline for claiming R&D tax relief is two years from the end of your accounting period. This means you can submit a claim for R&D tax relief for any qualifying activities in a specific accounting period up to two years after that period has ended.
Here’s how it works in practice:
If your accounting period ends on the 31st of December, you have until the 31st of December, two years later, to make a claim. For example, for the accounting period ending 31st December 2022, you would have until 31st December 2024 to claim R&D tax relief for qualifying activities undertaken during that period.
If your accounting period ends on the 30th of June, your deadline to claim R&D tax relief for the period ending 30th of June 2022 would be the 30th of June 2024.
It’s crucial to be aware of this deadline because if you miss it, you lose the opportunity to claim the relief for that accounting period. Planning and keeping detailed records of your R&D activities and expenditures will help ensure you don’t miss out on this valuable tax relief.
Why is the R&D claim period two years?
The rationale behind the two-year limit is to encourage timely and efficient tax planning. This ensures that HMRC can process claims within a reasonable timeframe, and it encourages you to maintain accurate and up-to-date records of your R&D activities, which is crucial for substantiating your claims.
Although the two-year claim window might seem restrictive, it actually highlights the importance of timely and strategic tax planning. By adhering to these guidelines and seeking expert advice when necessary, you can maximise your R&D tax relief benefits, significantly contributing to your innovations and overall growth.
Can you extend the R&D claim period?
The two-year deadline for claiming R&D tax relief is pretty strict. This deadline is enforced by HM Revenue & Customs (HMRC) and is part of the tax legislation. As such, there generally isn’t an option to extend this period for making R&D tax relief claims. Once the deadline has passed, you can no longer claim for that period.
However, there are a few considerations that could potentially impact your ability to claim or the timing of your claim:
- Amended returns: If within the two-year window, you can amend your Company Tax Return to include an R&D tax credit claim if you realise that you’ve missed including some qualifying expenditures or projects.
- Accounting period adjustments: Changing your accounting period could potentially affect the timing of your claim. However, this doesn’t extend the two-year rule; it just shifts the relevant dates based on your new accounting period ends.
- Exceptional circumstances: Very rarely, there might be exceptional circumstances recognised by HMRC where deadlines could be reviewed. However, these are extremely rare and case-specific.
The best practice is to regularly review your R&D activities and expenditures and consult with a tax professional or an R&D tax credit specialist to ensure that you’re capturing all qualifying expenditures and making claims in a timely manner within the existing rules and deadlines.
How do I submit an R&D claim outside the two-year period?
Unfortunately, the reality is that once the deadline has passed, there are very limited options available. As we mentioned above, the two-year claim window is strictly enforced, and this timeframe is calculated from the end of your accounting period. Once this deadline has passed, you lose the ability to claim R&D tax relief for that period.
However, if you find yourself outside of this window and believe you have a valid claim, there are a few steps you might consider, though it’s important to manage your expectations as HMRC is a stickler for the rules.
- Review and consult: Start by reviewing the specific circumstances that led to missing the deadline. Consult with a tax professional or an R&D tax credit specialist who can provide advice tailored to your situation. They can offer insight into the nuances of tax law and any potential avenues that might be worth exploring.
- Contact HMRC: While the rules are strict, if there were exceptional circumstances (such as significant administrative errors on HMRC’s part or severe personal issues affecting your ability to file on time), it might be worth discussing the situation with HMRC. But beware, this is very much an exception rather than the rule, and success in these cases is not common.
- Future planning: It might suck, but consider the experience as a learning opportunity. It will help you put systems and processes in place that ensure the timely submission of future R&D tax relief claims. This could include setting internal reminders, using tax planning software, or engaging a tax advisor to manage your claims process.
- Explore other funding: If an R&D tax relief claim is no longer possible for a past period, look into other forms of funding or tax relief that might be available for ongoing or future projects. The UK offers various grants, loans, and other tax incentives that might be applicable to your situation.
Never miss an R&D tax deadline again
Overlooking a date on the calendar is easily done but rarely is it as costly as missing your R&D tax claim deadline. Trusting an expert to manage your R&D tax claim enables you to do what you do best – running your business.
If you’re concerned you’ve missed your claim, get in touch. We can explore the validity if you have the potential to claim outside the window, help you plan for the future or identify other funding opportunities to help you meet your goals. Speak to our team to discuss how we can maximise your growth potential with R&D tax relief.
