HMRC requires a separate RDEC claim after an out-of-time SME correction

Companies correcting an incorrect SME research and development tax-relief claim after the Company Tax Return amendment limit has passed must submit any subsequent RDEC claim separately.GOV HMRC directs them to disclose the incorrect SME claim through the R&D Disclosure ServiceGOV, then send an RDEC claim for the same accounting period to lateclaims.incentivesreliefs@hmrc.gov.uk for considerationGOV.

The new instructions separate correction of the SME overclaim from submission of the Research and Development expenditure credit claim.GOV The R&D Disclosure Service is not the route for making that RDEC claim.GOV HMRC’s wording is expressly that the separately submitted claim will be consideredGOV; it does not promise acceptanceGOV.

The disclosure service is available where the company has overclaimed R&D relief, can no longer amend its return because the time limit has passed, and must pay additional Corporation Tax or repay overpaid R&D tax credits.GOV A director or company secretary can disclose the company’s affairsGOV, and an adviser can act on its behalfGOV. Companies still within the amendment limit should not use this service.GOV HMRC’s general return guidance says amendments usually have to be made within 12 months of the filing deadline.GOV

Deliberate behaviour is excluded from this disclosure route.GOV HMRC directs those cases to the Contractual Disclosure Facility where, when claiming, the company knew tax was owed or R&D credits were overclaimed but chose not to tell HMRC, or knew that the return figures were wrong when submitted. For fraud involving a company, HMRC’s CDF guidance says it can offer the facility to the responsible individuals.GOV

Where there is no Corporation Tax to pay and no tax credit to repay, HMRC provides a different contact: RD.IncentivesReliefs@hmrc.gov.uk.GOV The message should use “R&D Disclosure overstated losses” as its headingGOV and include revised computations, an explanation of the error, and an evidence-based view of the behaviour that caused itGOV.

For a disclosure, the computation must include the full original and revised Corporation Tax calculations, original and revised qualifying expenditure broken down by category and amount, and details of affected group-relief computations and companies.GOV The offer will usually be the full amount owed: unpaid Corporation Tax, SME tax credits or RDEC to repay, penalties and interest. Where an agent deducted fees from the original relief payment, the offer must include the full overclaimed relief, not merely the net amount the company received.GOV

The amendment rules are in the Finance Act 1998, Schedule 18, paragraph 15Legislation; the separate submission routes are set out in HMRC’s R&D disclosure guidanceGOV.