CIRD80540 - R&D tax relief: examining a claim: common errors

Some of the common errors made in R&D tax relief claims are:

• Project activities outside the scope of R&D for tax purposes are included in the claim.
• Expenditure outside the qualifying categories is claimed CIRD82000.
• Staffing costs are claimed in respect of people who are not employees of the company CIRD83000. (However, consider whether the expenditure qualifies as expenditure on externally provided workers CIRD84000.)
• Claims are made in respect of overheads that do not qualify as consumable items CIRD82300 or consumable stores CIRD82450.
• Expenditure is claimed on a particular item for a period before it was in a qualifying category CIRD98900.
• Special rules for connected parties are not applied CIRD82150.
• Companies do not recognise they are not SMEs CIRD91100.
• SME’s failing to make claims under the Large Company Scheme CIRD90050.

For the SME scheme only:

• A loss previously surrendered for a payable tax credit is carried forward CIRD90500.
• Unconnected subcontractor expenses are not restricted to 65% CIRD84200.
• The PAYE & NIC liability for the period in respect of employees of the company is less than the payable tax credit claimCIRD90500.
• The amount of surrenderable loss for the purposes of the payable tax credit is not restricted to 150%, or 175% from 1 August 2008, or 200% from 1 April 2011 of qualifying expenditure CIRD90500.
• A payable tax credit claim is made for expenditure that only qualifies under the large company scheme CIRD90500.
• No account is taken of subsidies or Notified State Aid - CIRD81650 and CIRD81670.