R and D tax credits – Frequently Asked Questions

Home » Business Tips » R and D tax credits – Frequently Asked Questions


Have you ever asked yourself what R and D tax credits are? They are designed to increase spending on R and D activities and encourage innovation of firms that operate in the United Kingdom. It is one of the government’s ways to encourage the investment in development and research, because the business that uses this incentive has the possibility to recover 33% of the sum they spend. As a business manager, you may have no idea if you qualify for r and d tax credits, so it is advisable to get in touch with a person specialised in this field, to help you figure out. It is recommended to hire a professional, because if you do not have knowledge on the subject you may not claim the full of the entitlement.

What you should know about the R&D Tax Credits?

This scheme has been established more than 15 years ago, and every year at least £2bn is claimed. This incentive was introduced in 2000, but since then the rates have increased. The present rate is 33% for loss making SMEs, and 26% for profit making.

How far can you make a claim for the R&D Tax Credits?

You can submit the tax relief claim at the time you want, up to the first year of the filling due date of the business tax return for the accounting time frame in which it is made. This means that you can make the claim for the tax relief only for the last two accounting years. You can make it in a company tax return, but also in an amendment to it.

What happens if you are late with the claim?

There is a guide that states exactly what will happen in case of late claim. Depending on the case, there may be multiple solutions, so it is advisable to talk with a professional. However, you should know that the success of your appeal in this situation would depend on the specific facts of your case. But you should know from the beginning that the HMRC does not usually allow a late claim because you consider that you did not have sufficient time or that you do not know all the details on the R and D tax relief scheme.

Will the HMRC make an enquiry into your business if you make a claim?

If you decide to make a claim for this type of tax relief then you should expect a HMRC specialist to come and review your actions. It is asked by the rules an inspector to come and review the first claim you make. They have the role to assess your claim and to state if the level of reviews for the claim is the right one. In case the inspector has questions on your claim, then they will make an enquiry and you will receive it in writing. It is advisable to have a detailed report to support your tax relief, because it is important to outline the uncertainties and technical advancements you have.

August 2022