Do I need to restate my accounts to claim R&D tax credits?

Many businesses wonder whether they need to refile their statutory accounts when submitting an R&D tax credit claim. The good news is that in most cases, you don’t need to restate your accounts.

R&D tax credit claims are usually handled via the company’s Corporation Tax return. If your accounts have already been filed and you later decide to make a claim, any adjustments can typically be reflected in the following year’s accounts, rather than reopening the prior year’s financial statements.

What is a prior-year adjustment?

Rather than amending your previously filed accounts, your accountant will likely include a prior-year adjustment in the next set of accounts. This reflects the R&D tax credit income (or reduction in tax payable) that applies to the earlier period.

This is a common and compliant approach that avoids the need for restating accounts, especially where the Corporation Tax figure in your original accounts was a provision.

SME vs RDEC: accounting treatment matters

There are some subtle differences in how R&D tax relief is treated in your accounts depending on which scheme you’re claiming under:

SME scheme (before April 2024):

• Credit is considered non-taxable.
• Treated as a below-the-line benefit, reducing your Corporation Tax liability.

RDEC scheme (now the default for most from April 2024):

• Credit is treated as taxable income.
• Recorded as other income above the line in your profit and loss account.

Your accountant will apply the correct treatment depending on when your claim is made and which scheme you fall under.

When would you need to restate accounts?

It’s very rare that a company needs to restate their statutory accounts to make an R&D claim. This would only apply in exceptional circumstances — for example, if your accounts didn’t comply with the Companies Act or contained a material error.

Since Corporation Tax in accounts is typically shown as a provision, changes following an R&D claim usually don’t require a restatement.