Claiming R&D tax credits from past periods

Can I claim R&D tax credits from past periods?

R&D Tax Credits are an incentive designed to reward innovative companies that are investing in R&D. They are linked to corporation tax returns, which is why there is a time limit on when claims can be made. However, if you are claiming R&D Tax Credits from past periods, it may still be possible, depending on how far back the claim goes. In fact, if the qualifying expenditure was during the past two years, you could still make a claim for it.

What is the R&D Tax Credits time limit?

It is two years from the end of your company’s accounting period. The reason for this timeline is because R&D Tax Credits are a corporation tax relief, and so tied into the timings around that. The deadline for amending a corporation tax return is usually 24 months after the end of the accounting period, hence the two-year time limit. Whether you’re making a claim for tax relief – or you’re a loss-making company claiming for a lump sum payment – the same rules apply.

How do accounting periods work?

Most accounting periods are 12 months long and are linked to when you file your company accounts. So, for example, if you file your accounts on 30th March every year, your accounting period will take you to 30th March in the following year. Regarding claiming R&D Tax Credits, if you file your accounts on 30th March 2021, you would have until 30th March 2023 to make a claim. Once you get past 30th March 2023, it will no longer be possible to make a claim under the scheme for the qualifying expenditure made during that time.

Is there any flexibility when it comes to accounting periods?

Yes, under the following circumstances:

• The start and year-end dates of an accounting period can be adjusted around when an R&D project takes place – For example, it’s possible to extend an accounting period up to 18 months. It’s also possible to reduce the length of an accounting period after a sizable R&D project because this will mean that R&D Tax Credits can be claimed sooner.
• The rules for start-ups – New companies that register with Companies House will get an incorporation date corresponding to the company’s registration date – the first accounting period will be 12 months from the end of that month. Accounting dates can then be moved to something that works better for the company, which means that for a first-year startup, the first accounting period could be 6-18 months, and so the first two accounting periods in which R&D Tax Credits can be claimed may not be the usual 12 months.
• Exceptions to the rule – HMRC will also allow “claims which could not have been made within the statutory time limits for reasons beyond the company’s control.” This includes where there was no knowledge of profits that could have been claimed against or where there were ongoing conversations about profit and loss with a tax inspector.

R&D Tax credits can be transformative for your business, so it’s worth discovering whether you’re within the claim timeframe.

SPRK Capital R&D Tax Credit Loans

When claiming R&D tax credit loans from HMRC, it can take up to 15 months to perceive your tax relief. We bridge the gap, giving you access to your funding 12 months earlier. Our R&D tax credit loans can give access to capital on either an ad hoc or quarterly basis. The process is easy, fees are straightforward, and you have even the chance to make your R&D funding go further. We receive the advanced amount directly from HMRC once your claim is processed, removing any debt against the loan. You can apply for a SPRK Advance here.