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Calculation of payable R&D tax credit

Calculation of payable R&D tax credit

I have recently submitted an R&D tax credit claim to HMRC and they have paid less than expected. Here is my calculation...

For accounting period to 31st December 2011 Ltd Co qualifying expenditure pre 1 April 2011 was £16,000 post 75% enhancement = £28,000 R&D deduction

For accounting period to 31st December 2011 Ltd Co qualifying expenditure post 1 April 2011 was £11,000 post 100% enhancement = £22,000 R&D deduction

Taxable loss for the period (before R&D relief) were (£46,000).

I calculate the payable tax credit as...

Adjusted loss for period = (46,000) + (28,000) R&D to April 1st = (74,000)*14% = £10,360


R&D post 1st April = (22,000)*12.5% = £2,750

Total tax credit payable (assuming sufficient PAYE & NI) = (10,360+2,750) = 13,110

My calculation is based on CIRD90500 - R&D tax relief. 

HMRC have adjusted my workings to calculate the payable tax credit to 1st April = 28,000*14% =£3,920 (excluding the effect of the adjusted loss).

Can someone please advise who is right?

Thanks in advance


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01st May 2012 13:40

It appears HMRC are correct

You can only surrender the losses attributable to R&D relief.

So you should only be able to surrender the £28,000 which is 175% of the qualifying costs of £16,000. The limit is at CTA 2009, s 1055(2)(b).

Also, if I understand the position correctly, it appears you're trying to claim tax credits on losses of £96,000, when you only have £69,000 arising in the period. You are restricted to the losses arising in the period.

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01st May 2012 13:58

BJ (and HMRC) is correct

Surrenderable loss is restricted to the lower of the enhanced R&D loss and the loss arising in the period.

Also, the OP is double-counting the R&D expenditure - eg the pre 01/04/11 expenditure of £16k has been included in both the £46k and the £28k. (Which is how you get from £69k to £96k - £16k + £11k double-counted)

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By merlyn
19th Jul 2012 07:26

Don't foget your surrenderable loss value cannot exceed your PAYE and NI liabilities for that period.  This has been removed from 1st April 2012, but would apply to your claim.


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11th Jun 2015 10:19

R & D



We have submitted an account without R&D, then we claimed R&D at 125 % which resul a loss therfore the corporation tax has been zero.  Could someone tell me how to adjust the correction? do I add the loss in the equity section BS or do I ingnore it all?

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