R&D

R&D

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Firstly happy new year to everyone.

Our year end is 31 July and we have a qualifying R&D project which straddles 2 accounting periods. 

For 31/7/12 a claim was made under SME rules to maximise tax relief.  However during 31/7/13 various grants were received in connection with the ongoing R&D project, which I understand strictly rules out making a claim under SME rules for that particular year.

My question is, are we allowed to switch from SME to large rules mid way through a qualifying R&D project?  I have looked at the R&D guidance issued by HMRC and tried several google searches but haven’t come found an answer.

Replies (5)

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By holywood
02nd Jan 2014 13:58

Type of Grant

The R&D tax credit claims will be prepared for each accounting period separately, so if the project straddles the accounting period, you will need to look at each period separately. You should be aware of the differences in the schemes. 

Also, I would add that remember that you should make sure the appropriate rules are applied with respect to the grant:

If the grant represents notified State Aid (ask the provider if you're not sure), the whole project for the 2013 period will be knocked out of the SME scheme. 

If the the grant is not notified State Aid, only the grant-aided portion of the expenditure is knocked out of the SME scheme. 

Finally, there will be a choice to make for any grant-aided R&D incurred after 1 April 2013 as the company may claim under the 'old' large company scheme or the new R&D Expenditure Credit scheme. 

If you need further assistance or want a review undertaken, feel free to PM me. 

 

 

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By User deleted
02nd Jan 2014 13:05

To clarify ...

... grants are not 'assessed' on a period by period basis. They are looked at on a project by project basis. If a project receives any NSA, then the whole of that project is ineligible for SME relief. So if NSA was received in 2013, no SME relief would be available for 2012 either.

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By User deleted
02nd Jan 2014 13:31

Sorry just to clarify

Thank you both very much for the replies.

Just to clarify in my own mind.

If an R&D claim has already been made under SME rules for 2012 and then a notified state aid grant has been received in 2013 does that mean the 2012 claim needs to be amended.

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By holywood
02nd Jan 2014 14:00

...

BKD's point is correct, the project is knocked out of the SME scheme if a notified state aid has been received for any attributable expenditure to the same R&D project. 

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By Stratfan
08th Jan 2014 15:54

Before withdrawing the 2012 claim I would check if the 2013 grant-aided project is indeed the same one as that you claimed for in 2012.

One of the conditions for a grant to be awarded is that the project has not, and would not, otherwise have commenced without it. There is thus a case to be made that the activity the grant was given for is actually a separate project to the previous one you made an R&D claim for.

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