Top tips: additional information forms for R&D claims

Richard Edwards, CEO and founder, The R&D Community - Croner-i

The additional information form (AIF) has become a crucial part of the R&D tax relief claim process, explains Richard Edwards, founder, The R&D Community.

Since 8 August 2023, every R&D tax relief claim requires an additional information form (AIF), regardless of the accounting period. Failing to complete the form before submitting the CT600 will result in HMRC rejecting the claim.

Here are three key tips to help you ace the AIF.

1. Understand the form’s structure and requirements

The AIF is structured into eight distinct sections, covering all aspects of the R&D claim:

• Company details: this includes the unique taxpayer reference (UTR), employer PAYE reference number, VAT registration number, and standard industrial classification (SIC) code.

• Company and agent contact details: provide information for the senior contact within the company responsible for the claim and any agent involved in preparing it.

• Accounting period: specify the start and end dates for the period your client is claiming tax relief, ensuring it matches the period shown in the company tax return.  

• Relief confirmation: indicate the type of relief being claimed (SME, old RDEC, new RDEC (ie, the Merged scheme), enhanced R&D intensive support (ERIS), or a combination) and whether the company is exempt from the PAYE cap and overseas expenditure restrictions, if applicable.

• Expenditure summary: provide a breakdown of qualifying expenditure by cost category, with qualifying indirect activities (QIAs) separated out.

• Project details: include the number of projects being claimed for in the accounting period and detailed descriptions of the activities undertaken. The number of descriptions required varies depending on the number of projects:

  • 1-3 projects: details for all projects.

  • 4-10 projects: details for at least 50% of qualifying expenditure (minimum 3).

  • 11+ projects: details for at least 50% of qualifying expenditure (minimum 3, maximum 10).

Project descriptions should cover:

• Main field of science or technology: the area in which the advance is being claimed.

• Baseline level: the state of scientific or technological knowledge in the sector at the project’s start.

• Aims: the advancements in scientific or technological knowledge or capability that the company aimed to achieve.

• Uncertainties: the scientific or technological uncertainties encountered.

• Activities undertaken: how the project sought to overcome these uncertainties.

• Total qualifying expenditure: the amount being claimed for each project.

• Additional details for loss-making R&D-intensive SMEs: include total relevant expenditure, relevant R&D expenditure, and total relevant expenditure of any connected companies.  

2. Pay close attention to project descriptions

HMRC uses the AIF as its primary screening tool. Even minor errors can lead to extended interactions with the compliance team.

Conversely, accurate and thorough completion significantly increases the likelihood of a smooth R&D claim process.

When describing projects, ensure you cover all the required points with clarity and precision. Avoid using too much technical jargon, as the caseworkers at HMRC might not be familiar with that specific industry.

Everything on the form should be understandable by a layperson.

This includes explanations of the main field of science or technology, the baseline level of knowledge, the aims of the project, the uncertainties encountered, and the activities undertaken.

Providing comprehensive and well-structured project descriptions is crucial for demonstrating the qualifying nature of the R&D activities.

3. Be aware of recent updates to the AIF

In September 2024, HMRC updated the AIF to include new questions related to the new RDEC and ERIS schemes. These changes affect claims for accounting periods starting on or after 1 April 2024. Key updates include:

• Claim details section: this section now includes an information screen outlining the relevant R&D schemes and links to HMRC guidance. It is important to note that companies that meet the ERIS criteria can split qualifying expenditure through the ERIS and Merged schemes at their discretion.  

• Cost breakdown: for both the Merged and ERIS schemes, you must provide detailed evidence to show that overseas expenditure restrictions have been applied correctly. This includes specifying the amount of qualifying expenditure related to overseas activities and providing details of why the company is exempt from the restrictions.

Conclusion

By following these tips, you will stand in good stead to tackle the revised Additional Information Form. While its questions might seem straightforward, to get the best results you need to understand the underlying rules and why HMRC is asking them.

Plus, the fact that HMRC relies on it so heavily as a screening tool elevates it from a box-ticking exercise to a critical part of the claim process.

Additional resources

Looking for more information to strengthen your understanding of the process and make your work more efficient?

• Training course, Making the most of HMRC’s Additional Information Form