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Taxfiler not apportioning R&D costs?

Calling all taxfiler geeks out there...help with apportioning

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Respected fellows,

I am having some great difficulty in preparing amended tax returns for my client, who wishes to submit an R&D claim (SME) for their start-up tech company.

Summary:

  • Client's accounting period is 2 December 2019 to 31 December 2020
    • Therefore, two tax returns:
      • First: 12 months ended 1 December 2019
      • Second: 30 days period ended 31 December 2020
  • Turnover: Zero
  • Admin expense: 1,063,050
  • Loss before tax: 1,063,050

Up until now, Taxfiler apportions the above correctly.

However, when it comes to entering the enhanced R&D expenditure in the adjustments to trading profit tab, Taxfiler does something odd;

I enter the total R&D costs (say, £317,596) for the entire long period to 31 December 2020, and taxfiler apportions as expected, just like it does so for depreciation, entertaning etc on the same tab.

However, the problem is that when surrendering the surrenderable amount, taxfiler considers the total unapportioned enhanced expenditure for the entire long period rather than only using the apportioned amount for the 12 month period.

If I manually entered the apportioned amount in the adjustment to profit tab, then taxfiler would apportion that again thinking its 100% of costs for the entire long period.

I have calculated this simple computation on another tax software, which matches my own offline calculations. 

Could any taxfiler experts please advise? I tried customer services but they don't seem to undertsand my issue..  

I am happy to post my expected computations if anyone is interested. 

 

Many thanks

 

Replies (5)

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By frankfx
25th Feb 2021 09:57

You may want to escalate this to Iris executive office.

The tax technical team at the software house, 'must' understand user needs.

Your experience may well be replicated, without being addressed and fixed.

Begin enough to cope small enough to care.

Put it to the test.

Thanks (1)
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By daniel_
25th Feb 2021 15:00

Agree that it's not doing it correctly. While it's not ideal, you can override losses surrendered by going to R&D Tax Credit section > R&D Tax Credit Tab > Check the box for override and enter the apportioned amount of losses and tax credit.

Thanks (1)
Replying to daniel_:
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By JPatterson
25th Feb 2021 16:09

Thanks for your response - yes the override option isn't favourable albeit a solution. It's just annoying that you rely on the software to pick up the correct amount and almost a risk on getting the wrong claim(s) in!

Thanks (0)
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By OldParkAcct
25th Feb 2021 16:05

Out of interest, do you actually need 2 ct returns ?
If the company was formed 2 December, but did not start trading until January then you only need a ct return for the 12 months to 31 December.

Thanks (1)
Replying to OldParkAcct:
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By JPatterson
25th Feb 2021 16:10

I see where you are coming from, and in this case, yes we do need 2 ct returns. But the underlying issue still remains, which is why taxfiler doesn't pick up the correct amount to surrender in proportion to the period.

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