The research and development tax credit can be claimed for an accounting period which ends up to 2 years before the claim is submitted. And, because the R&D tax credit is retrospectively applied to R&D costs up to a year after they’ve been incurred, you can effectively claim the credit on costs incurred up to 3 years prior.
For example, if you have a 12 month accounting period, with a year-end of March 31st, then you’ll need to submit your R&D tax credit claim for the accounting period April 1st – March 31st 2019 by midnight on March 31st 2021. This effectively means that you’ll be able to claim for R&D costs incurred a day less than 36 months before claim date.
What this also means is that if your accounting period is longer than 12 months, you will even be able to claim for costs relating to R&D activity beyond 36 months.
It’s common for newly formed SMEs to adjust their accounting year-ends after they register as a limited company at Companies House. This is because the year-end is automatically set as the company registration date. However, a more operationally convenient date like the UK financial year-end on 31st March is often preferred.
R&D tax credits are a Corporation Tax relief and therefore are subject to the limitation of 2 years that covers any type of amendment to a Corporation Tax return. This is aggregated from the 12-month company tax return filing deadline and an additional 12 month amendment period thereafter. HMRC publish the guidance surrounding amendment time limits here.
If you’re new to R&D tax credits and are concerned that you may have missed the opportunity to make a retrospective claim, then get in touch with one of our team who will be able to advise you on the best way forward. We would also recommend reading our introduction to R&D tax credits to better understand the scheme.