The research and development (R&D) tax credit claim time limit is two years from the end of your accounting period. Before this period ends you must submit an (R&D) tax credit claim for any qualifying expenditure that you’ve identified during that period. This is because R&D tax credits are a Corporation Tax relief and the deadline for amending your Corporation Tax return is typically 24 months after the end of your accounting period.
This same time window applies if you’re a loss-making company due to receive a cash lump sum for your R&D tax relief claim, as opposed to CT relief.
What is the R&D tax claim deadline?
This same time R&D tax deadline of 24 monthswindow applies if you’re a loss-making company due to receive a cash lump sum for your R&D tax relief claim, as opposed to CT relief. This two year period also applies to both larger companies claiming through the RDEC scheme, as well as SMEs.
R&D accounting periods
Accounting periods are usually twelve months long. If, for example, you filed accounts in March this year, you have until 31 March 2025 to make a claim for your accounting period 31 March 2023. Once you hit the R&D claim deadline at midnight on 31 March 2025, you can no longer recoup the money you spent on qualifying activities between 1 April 2022 and 31 March 2023.
Can you extend the R&D claim period?
- Yes, companies can adjust their accounting periods (start and year end dates) around when an R&D project takes place.
- The accounting period can be extended up to a possible 18 months.
- Companies can shorten the accounting period after a big R&D project as this means they can claim the relief/credit sooner.
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R&D tax credit timings for start-ups
This may be different if you are a start-up in your first year of business. When you register your business with Companies House, your incorporation date is set at that nominated registration date. The first accounting period is set as twelve months from the end of that month. However, this may not be a convenient date going forward.
Commonly, businesses will move their accounting year-end date to something more appropriate to their commercial seasons. Indeed, a large number of UK companies find it convenient to use 31 March as the end date for their business year so that it is the same as the tax or fiscal year.
In your first year of business, your financial period may be anything from six to 18 months. This means that your first two accounting periods as a business (for which you are able to claim) may not be two (12-month) years.
For the purposes of making an R&D tax credit claim, regardless of the length of your accounting periods, the deadline for filing will still be two years from the end of each accounting period.
The rules are similar if you change your accounting period end date at any other time.
Furthermore, you may have started an R&D project before the earliest period that you can claim for. But if you are still working on the project, and you are still working to resolve scientific or technological uncertainty in your last two accounting periods, then you can still claim for expenditure incurred in these periods – even if the project started before then.
R&D claims outside the two year range
HMRC does, in certain situations, allow the extension of the two-year time limit. These exceptions are, however, rare.
HMRC may wave the two-year limit in situations where “claims which could not have been made within the statutory time limits for reasons beyond the company’s control”. In its Statement of Practice SP 05/01, HMRC explicitly outlines the following two examples:
- “At the date of the expiry of the time limit, the company or its agents were unaware of profits against which the company could claim relief.”
- “The amount of a profit or loss depended on discussions with an inspector which were not complete when the time limit expired, and the delay in agreeing on figures is not substantially the fault of the company or its agents.”
Claiming R&D with ForrestBrown
ForrestBrown specialise in helping companies navigate the R&D tax incentives: including both SME and RDEC. Our team of chartered tax advisers use their expertise to help innovative companies optimise their R&D tax credit claims and ensure all your qualifying activities and costs are properly identified.
Making your first claim
If you’re new to R&D tax credits, we can help you get started and set you up for your future investment in innovation. We will adapt to your business, offering a bespoke service to meet your unique requirements.
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It can be complicated to submit an R&D tax credit claim to HMRC’s exacting standards.
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