HMRC's R&D Disclosure Service
Companies can now use a new online service introduced by HMRC on 31 December 2024 to disclose errors that have mistakenly been made when claiming R&D tax relief. This service is intended for unintentional errors and is not applicable to deliberate or fraudulent claims. Here's a summary of how this service works:
Who Can Use the Service?
A disclosure can be made by the company secretary, a director or by someone acting on the company's behalf (e.g., an agent). If the agent making the disclosure is not the company's authorised agent, the company will need tocomplete HMRC's standard form as part of the disclosure. For more detail regarding this form and its completion please get in touch.
Eligibility Criteria:
Companies can utilise this service if they:
- Have overclaimed R&D tax relief.
- Are unable to amend their tax return due to the expiration of the amendment period.
- Need to repay overpaid tax credits or additional Corporation Tax resulting from the overclaim.
How to Use the Service?
To make a disclosure, companies should:
- Prepare the Disclosure: Gather all relevant information regarding the overclaimed amount.
- Calculate Amounts Owed: Determine the additional Corporation Tax or overpaid tax credits to be repaid, including any interest and applicable penalties.
- Submit the Disclosure: Use HMRC's online form to provide details of the overclaim and the calculated amounts.
- Make Payment: After submission, arrange payment for the owed amounts as instructed by HMRC.
Potential Consequences of Waiting for HMRC Contact
If HMRC identifies the error before the company discloses it voluntarily, the company may be liable for extra interest on the unpaid tax. Penalty charges could also be higher since voluntary disclosure usually results in reduced penalties due to the company's cooperation or HMRC may decide to open a criminal investigation.
Penalties are calculated based on the nature of the error. By waiting for HMRC to discover the error, the company risks being treated more harshly, especially if HMRC views the delay as a sign of non-compliance or concealment.
Conclusion
Companies that identify errors in their R&D tax relief claims should act promptly to disclose and rectify these mistakes. It is advised that the company/agent seeks professional tax advice first to ensure that they have the necessary information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
