From the 8th of August 2023, claims submitted for the Research and Development (R&D) tax relief scheme have been required to send in advance an Additional Information Form (AIF). This change was originally announced in April of this year, and here at Kirby and Haslam, we have been working to streamline this transitional period for our clients as much as possible. Now, a month on from these regulation changes taking effect, it’s hugely important to understand how these procedures can potentially impact your claim.
What is the AIF?
The Additional Information Form supplements the previous submission system, providing a summary breakdown of the work undertaken over the course of the claim period, which is followed by full financial detailing and narrative on submission. Alongside the required financial and expenditure information, companies looking to claim on the R&D tax scheme will now also have to feature information on the projects undertaken in a formal, standardised system.
Having been introduced by HMRC, this form is a requisite for claiming on the R&D tax relief scheme and intends to reduce the potential for erroneous or fraudulent submission. Any claims submitted without this information will be automatically rejected; HMRC have reported that as of September 2023 nearly half of all claims they have received since the 8th of August did not include the mandatory AIF. This is exactly why it is paramount to comply with these new guidelines and work with a reliable partner, as failure to submit an AIF in advance will result in your R&D relief being instantly rejected.
Responding to the procedural amendments, originally announced in April, Kirby and Haslam worked to introduce pre-submission reports that encapsulate the required information for R&D claims. These built upon the previous post-submission structure and were in operation within the company far ahead of August. This has allowed for a much steadier transition into the new AIF system, with clients already prepared for the further information required. Being proactive and adapting to these processes early equally allowed for internal changes within Kirby and Haslam, with structures being implemented to allow a more efficient workflow within these reports. As a result, all of our submissions made since August 8th have been supported in advance by the relevant AIF.
Moving forward, the structure of these submission reports may be updated and improved upon in response to any potential feedback or regulation updates from HMRC.
How This Affects You
Submitted claims moving forward will require the AIF breakdown of eligible R&D costs, as well as information surrounding the R&D projects. Eligible costs can include expenditure such as staffing costs for employees involved within the project, subcontractor wages and material pricing used within the project. This will be required alongside a report of the work undertaken, detailing challenges faced over the course of the project, as well as how your project sought to innovate within its industry and the activities undertaken to achieve these goals.
Claims submitted prior to the regulation changes will not require AIF amendments to the submissions. However, HMRC may still choose these cases for compliance checks during their R&D relief enquiries, which require their own post-submission reports.
Further changes to the R&D regulations are expected to come in 2024, with amendments to qualifying expenditure being introduced within April of next year, and a proposed merger between the RDEC and SME schemes. As the landscape continues to evolve, we at Kirby and Haslam will endeavour to continue our proactive responses to these regulation advancements, ensuring our reports remain compliant within the changing guidelines.
With this constantly adapting landscape, we strongly advise working alongside an R&D compliance specialist such as ourselves to stay ahead of these changes.