Newly released R&D Supplement CT600L will speed up process and prevent fraud
HMRC has announced a change in the way all UK companies must submit their application for R&D Tax Credits. The change kicked in on the 1st April 2021, and adherence is mandatory.
What is the CT600L?
The CT600L is a four-page supplementary form that should be submitted with a company’s corporation tax return when making an R&D claim. The form applies to all companies making claims under the small and medium-sized enterprise (SME) or R&D Expenditure Credit (RDEC) schemes from 1st April 2021, regardless of the accounting period.
There will still be a few boxes included on the main corporation tax return (CT600) which require limited disclosure of qualifying expenditure and tax credits claimed, however, the new supplementary pages require significantly more detail than previously.
It is key to note that without a completed CT600L, an R&D claim will not be valid.
From 1st April, all companies submitting their claim via the SME or the RDEC branch of the scheme will now need to fill in an additional page - the CT600L. This supplementary form should be included when their corporation tax self-assessment is submitted, or at the stage when any amendments to the self-assessment are required.
The government has outlined a number of benefits in introducing the CT600L but importantly, it’s likely the measure will speed up the processing time of R&D Tax Credit applications, as well as reducing fraud. All claimants looking to receive R&D Tax Credits should be aware of this upcoming change.
HMRC circulated the specifications to all accountancy software providers in August 2020 and most providers have upgraded their platforms to comply with this change. However, we have been advised that some software providers may have not updated their platforms to accept the new CT600L version just yet.
If you or your accountant’s online software provider is affected by this issue, and you do not wish to wait to make a claim until the software is updated, you will need to submit a manual paper return including the CT600, CT600L and any other supplementary pages. We have received confirmation from HMRC that whilst paper returns are required for original Corporation Tax Self Assessments (paragraph 3 Schedule 18 FA 1998) they will be accepting the appropriate forms attached to an email in respect of amendments to self-assessments (paragraph 15 Schedule 18 FA 1998).
You will also be required to supply a completed form WT1 explaining (in box 6) that your software provider has not provided the updated software yet and placing form WT1 on top of the CT600 return. Please send your paper return to Corporation Tax Services, HM Revenue and Customs, BX9 1AX, United Kingdom.
We would also advise that, unless the R&D claim will be lost due to your accounting period end, it would be more efficient to wait a week or two and submit the claim once the software has been updated for the CT600L. If the R&D entries have already been made, they may well have to be re-entered following the software update, so as the figures filter through on to the new supplement.
If you submit a paper return, please note that the 30 day aim in CIRD 80525 will not apply to that claim and that, depending on the number of claims affected, there may be a long delay before the claim is dealt with.
Why is the new CT600L form needed?
First and foremost, without the inclusion of the CT600L, an R&D claim will not be valid, however the primary reason for the CT600L is to reduce fraudulent R&D Tax Credit claims. Whilst the majority of unsuccessful claims are typically down to innocent errors, a certain percentage of them are due to fraud. Unfortunately, we know that millions of pounds of fraudulent claims are actually successful each year, taking up taxpayer resource and damaging the reputation of the scheme.
But even innocent mistakes are extremely easy to make. The process of claiming R&D Tax Credits is notoriously complex with eligibility rules changing regularly and we recommend working with R&D tax specialists on your application, instead of attempting a ‘DIY approach’.
A consultation with one of our team of experts here at Momentum is entirely free of charge and we would be happy to guide you through any queries you may have. Do not hesitate to get in touch with our professionals on 028 9140 4030 or contact us.