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Do I have to restate my previous accounts for R&D tax credits?

by Stephen James

It is not necessary to restate (or re-file with amendments) previous accounts to claim research and development (R&D) tax credits. An R&D tax credit claim can be treated as a prior-year adjustment in the following period’s accounts. It is, however, worth noting that the accounting treatment for SME R&D tax credits differs from large company (RDEC) claims.

You can restate your previous accounts for R&D tax credits, but you don’t have to. In our experience, it would actually be very unusual to do so. Re-stating your accounts is only necessary when your accounts do not comply with the Companies Act. The Corporation Tax shown in your accounts is simply a provision, therefore any subsequent change to your liability generally does not require your accounts to be re-stated.

Typically, your accountant will simply include a prior-year adjustment in your next year’s accounts.

After you have submitted your first R&D tax credit claim, we can time the preparation of your next R&D claim to align with your accountant’s timelines for preparing your accounts and corporation tax return. This means we can reduce your tax liability ahead of the due date, securing you a cash-flow advantage.

Although the accounting treatment for the RDEC scheme (Research and Development Expenditure Credit for large companies, and some SMEs) is different, you still don’t need to restate your previous accounts. Again, your accountant can include a prior-year adjustment in your next year’s accounts.

Here at ForrestBrown, we work closely with hundreds of accountants on behalf our clients to deliver a streamlined process and ensure the right adjustments are made at the right time.

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This article was last updated on 7 May 2019.

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