How Far Back Can You Claim R&D Tax Credits?
Businesses often realise that they have undertaken qualifying R&D activities after accounts and tax returns have already been filed. Whilst you may think the opportunity for claiming valuable R&D tax credits has gone, this is not necessarily true. However, recent changes to the rules mean the deadlines for claiming have changed too. To boost cash flow, familiarise yourself with the limitations on how far back you can claim R&D tax credits. We have summarised the key considerations in this article.
Claiming R&D Tax Credits: Look-Back Period
R&D tax credit claims can either be made in the company's original corporation tax return or in an amended corporation tax return. Companies have 12 months to file their tax return and a further 12 months to amend the return.
Accounting periods beginning before 1 April 2023
The R&D tax credit claim must be submitted within 12 months of the filing date for the company's tax return.
For example, if your company's accounting period ran from 1 January 2023 to 31 December 2023, you would need to submit an R&D claim by 31 December 2025.
Accounting periods beginning on or after 1 April 2023
The R&D tax credit claim must be submitted within two years of the end of the period of account on which the return is based. There is different rule if the period of account is longer than 18 months; the time limit is 42 months from the start of the period in such a scenario.
However, the claim notification requirement which was introduced for periods beginning on or after 1 April 2023 means that the deadline is effectively shortened for some companies. The claim notification requires the company to pre-notify HMRC that it will be claiming R&D tax credits in its tax return.
The deadline for notifying HMRC in advance is usually 6 months after the company's year-end. If your company undertook R&D activities in the accounting period which ran 1 January 2024 to 31 December 2024, then you would need to notify HMRC of your intention to make a R&D tax credit claim by 30 June 2025. This requirement is specifically for companies claiming R&D tax credits for the first time, or those who haven't claimed in over three years.
This change means that companies who are claiming for the first time and those that have made R&D claims through amended tax returns will need to decide within 6 months of the end of the accounting period if they intend to make a claim.
If you want to understand whether you have the opportunity to make and R&D tax credit claim for previous years, please get in touch.