The area of whether or not reimbursed expenses can be included in an R&D Tax relief claim has always been one where clients find confusion. The CIRD manual specifically state that R&D reimbursed expenses are qualifying staff costs. However, if the expense was not reimbursed but actually paid directly by the company, e.g. on a company credit card it could not be included within the claim.
This meant that the exact same costs for one company could be included in a claim yet for another could not. All due to the reimbursement/payment method.
HMRC have been aware of this anomaly for some time. The Research and Development Consultative Committee on 8 October 2014 read out a note which indicated that expenditure reimbursed to an employee did not qualify as a staffing cost for R&D tax relief purposes.
However, the revised CIRD83200 updated in October 2016 clarifies circumstances where reimbursed expenses are allowable for R&D tax relief.
The impact of this revised guidance and HMRC’s note means that many companies have under claimed R&D reimbursed expenses.
What about companies who have restricted their claims?
Where claims have been restricted as a result of the company HMRC’s note on 8 October 2014, it is possible to amend the historic claim. To make an amendment the following must apply:-
- The restriction would not have been applied if the company had relied on the 2016 guidance. Published on 27 October 2016.
- The accounting period where the claim was restricted ended between 9 October 2012 and 30 April 2016.
- The original claim for that period was made on or after 9 October 2014.
When the above applies, the company can make a revised claim to HMRC to include the missing expenditure. The company can make this claim even though strictly out of time.
How to make a claim for R&D Reimbursed Expenses under-claimed?
To amend historic claims to now include R&D reimbursed expenditure relevant to the R&D project and in line with the manuals the following applies;
- Write to HMRC
- Claim before the deadline of 30 April 2018.
- HMRC review. HMRC will aim to make appropriate payment or raise queries.
For assistance adjusting your historic claims with HMRC please do not hesitate to get in touch with our team.
