How far back can you claim R&D tax credits?

How far back can you claim R&D tax credits?

It is possible to claim R&D tax credits up to two years after the end of an accounting period. This is in line with the timeframe in which you are allowed to revise a corporation tax return. The correlation exists because the credits are a relief set against your corporation’s tax bill. So, in essence, submitting a historic R&D tax credit claim is the same as making an amendment to your tax return.

This means that if you are new to claiming R&D tax relief, or you belatedly realise you have other R&D projects and expenditure you can add to previous claims, you can look back at your previous two accounting periods to get the full amount of R&D tax relief you are entitled to.

Note that you will have to pre-notify HMRC of an intention to claim if you are new to claiming R&D tax relief or your last claim was made more than three years prior to the last day of your claim notification period. Claim notification periods normally run from the beginning of an accounting period for 18 months. We can help with this and we have an article which explains your requirements in more detail here.

What is the R&D tax claim deadline?

Two years is the current R&D tax claim deadline, which is measured from the end of your accounting period. R&D tax relief is always claimed retrospectively to your R&D expenditure because you make the R&D tax claim against your corporation tax which can only be known accurately once an accounting period is over. Your R&D tax claims will always be either in year one or two after the qualifying activity and expenditure.

R&D accounting periods

Accounting periods are typically 12-months long, serving as your business year. Exceptions, covered later, may arise when periods are longer or shorter than a year. R&D accounting periods are the same as your business year.

For example, if your business year ended on 31 August 2024 and you had carried out an R&D project in that year, you would have until 11:59 on 31 August 2026 to submit a claim for any qualifying R&D expenditure made. This would represent the 24-month deadline expiring after the end of your R&D accounting period.

Can you extend the R&D claim period?

It is possible to amend your accounting period (business year), and working around an R&D project is a perfectly justifiable reason to do this. The maximum an accounting period could be stretched to is 18 months, which may give you more time to claim.

Conversely, it is possible for you to shorten your accounting period for R&D tax relief purposes. The reason for doing this is that it would enable you to make a claim for R&D tax relief earlier should this be important to your cashflow.

R&D claims outside the two-year range

There are limited circumstances in which you may be able to claim R&D tax relief outside the two-year range we have described. HMRC has a provision where the deadline may be waived if circumstances beyond your control prevented you from claiming within the statutory period.

In their Statement of Practice 5 (2001) they state two acceptable examples for waiving the statutory deadline to be as follows:

• At the date of the expiry of the time limit, the company or its agents were unaware of profits against which the company could claim relief.
• The amount of a profit or loss depended on discussions with an inspector which were not complete when the time limit expired, and the delay in agreeing figures is not substantially the fault of the company or its agents.

They do not suggest this is an exhaustive list of reasons why an R&D claim may be made outside the two year range, but it is uncommon.

Why choose us?

Kene has a long track record of helping innovative businesses claim R&D tax relief efficiently and compliantly. Our expert team of chartered tax advisers and industry experts have assisted hundreds of clients in claiming more than £106 million in R&D relief. On average our clients get a £73,000 boost to their business per claim.

Get in touch today

If you think or know that you have unclaimed R&D tax relief dating back for R&D projects carried out in the last two business years (accounting periods), please get in touch. Our award-winning advisory service puts our clients at the heart of everything we do. You can book a free consultation or take our free eligibility assessment.

‍