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September 2023

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To September’s Business Companion News.

This month we are focussing on R&D Tax Credit claims. R&D tax credits is a government incentive for encouraging investment in research and development. If your company is taking a risk by seeking to advance science or technology in your field, then it is likely that you will qualify for R&D tax credits. The process of applying is explained in the article below. if you want to discuss whether you are likely to qualify for this scheme. 
September 2023
· R&D Tax Credits – an Update
· An R&D Tax Case lost by the Taxpayer
· Certificates of Residence
· Template Documents for Running your Business
· September Questions and Answers
· September Key tax dates
R&D Tax Credits – an Update
HMRC now require extra details on R&D claims before they will consider a reduction in the Corporation Tax liability.  All R&D claims now have to be preceded with a detailed online ‘Additional Form’.  This form must be completed and submitted before the corporation tax return which itself is due 9 months after the year end. The additional form will formalise and standardise headings and information required on an R&D claim.  They require much more written detail than in the past.  

Much of the new information we can trace for clients from our other records.  However the new information which we have to ask for is summarised below.

New Information required on the form:
– Summary of qualifying expenditure by cost category, with qualifying indirect activities (QIAs) separated out.
– Project details, including the number of projects being claimed for in the accounting period and descriptions.
– Total qualifying expenditure being claimed for each project.
– The breakdown between prespecified cost headings (including staff, software, payments to research contractors etc). 

Project descriptions should include:
– The main field of science or technology the project relates to.
– The baseline level of science and technology at the start of the project.
– What advance in that scientific or technological knowledge the company aimed to achieve.
– The scientific or technological uncertainties faced.
– How the project sought to overcome these uncertainties

Where appropriate we will help prepare R&D Tax claims for our Business Companion clients and we will submit them on their behalf. This is a (another) new HMRC process/ system.  Initially we will prepare and submit without extra charge but once we are familiar with what the process entails we will consider charging an extra fee to our clients.

HMRC Enquiries into R&D Tax Credits Claims
HMRC do not seem happy with the R&D Tax Credits process and seem convinced that most claims are fraudulent. Therefore if you do submit an R&D tax credits claim do not be surprised if you receive one of the following letters.  These letters are routine so you don’t need to worry about them. 
– First Time claimants may get a ‘please reconsider your claim’ letter.
– Repeat claimants may get letters saying ‘your advisor might be making fraudulent claims.’

However HMRC are also doing compliance checks on a proportion of R&D tax credits claims. These require return of extra information/ documents to support the claim.  If you receive one of these enquiry letters we can help you gather the information and respond on your behalf.  
An R&D Tax case lost by the taxpayer top
Certificates of Residence
AHK recruitment Ltd was a company that provided recruitment services. The company decided to make software, using AI, to match candidates to vacancies. The development work was outsourced to third parties. AHK worked with a third party R&D firm who prepared the R&D claim for submission to HMRC. 

HMRC raised an enquiry into the claim  and eventually the case was listed for hearing before the first tier tax tribunal. The tribunal found in favour of HMRC and denied the R&D tax relief.
The problems in the AHK case
The tribunal found the following difficulties with the case presented by AHK:-
1.    There was a lack of technical detail included in the report submitted to HMRC. The narrative discussed the social science of the project not the overall increase in technology
2.    The technological uncertainties were not clearly defined
3.    Invoices from sub-contractors did not state what work had been done and no back up documents were submitted to the tribunal
4.    There was no individual available who had contemporaneously worked on the project to provide evidence to the tribunal
5.    There were long delays caused by the taxpayers and their advisors
6.    No evidence was submitted to the tribunal that dealt with the lack of technical detail in the initial report

This shows the importance of writing a comprehensive report explaining how the project qualifies, the technological uncertainties identified ; how those uncertainties were solved and supporting details and timesheets.
You can claim tax relief in another country if you pay tax on your foreign income in the UK, and you have a certificate of residence (CoR).
You can apply for a CoR if:
•    you’re classed as a resident of the UK
•    there’s a double taxation agreement with the country concerned
If you’ve already paid the tax you may be able to get a refund.
The overseas authority dealing with your claim will normally ask HMRC to certify that you’re a resident of the UK, in line with the double taxation agreement.
HMRC will not send a CoR if you’re not entitled to treaty benefits under the double taxation agreement.
The relevant overseas authority decides if relief from foreign taxes can be granted.

How to apply: Individuals and sole traders
To apply for a CoR:
•    you can use the online service
•    email a form (you will not need to sign in to an online account)
•    if you’re an agent applying on behalf of an individual or sole trader you can apply online 
To use the online service, you need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you use the service.
If the other country gives you a form to certify residence, you’ll need to send it to:
Pay As You Earn and Self Assessment 
HM Revenue and Customs 
Template Documents for Running your Business top
There are all sorts of documents that we use to help protect your business. Some of these we get drafted specifically for you.  We have a Personnel Advisor who is currently drafting up new HR contracts for all the staff of one of our larger clients.   

But there are some documents that you are best sorting out for yourself.  This link provides a great source of contracts and documents for new staff, import/export, financial planning and many other topics:

Strangely the main UK government site only offers very few templates of this nature.  These templates have been written for Northern Irish businesses with a Northern Irish accent.  But they should be perfectly usable in the rest of the United Kingdom. 
September Questions and Answers top
September Key tax dates top
Q: I see that one of the Inheritance Tax (IHT) forms has been amended – the C4 for correcting information previously submitted. I’m getting a bit confused with the forms I have here and wonder if you could point to these C forms and give the most current reference? Answer

Q: When the Bank of England raised interest rates (which it might do again!), we assume HMRC followed suit with their interest rates on late payment of Stamp Duty. Can you please advise these rates and link us to the page where they are declared on HMRC’s website? Answer

Q: When we have an employee on maternity leave (receiving SMP), we know when she receives a salary increase that we must go back and recalculate her average weekly earnings as if she had been on that increased salary when we calculated SMP in the first place. We have assumed this is the same when someone is on adoption leave (and receiving SAP). Can you confirm? Answer

VAT payment deadline for accounting periods ended 31 July 2023.


– Deadline for sending the Employer Payment Summary (EPS) for tax month ending 05 September 2023
– Deadline for paying HMRC all PAYE, NICs, Student Loans and CIS deductions (less child-related statutory payments) if paying by a non-electronic method


– Deadline for paying HMRC all PAYE, NICs, Student Loans and CIS deductions (less child-related statutory payments) if paying electronically. HMRC must have cleared funds on or before this date


Corporation Tax Self-Assessment (CTSA) deadline for returns to HMRC (for accounting periods ended 30 September 2022).
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

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About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, AccountEdge, Xero, Quickbooks or Clearbooks.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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