R&D Disclosure Service

HMRC has issued a new R&D Disclosure Service that taxpayers can use to voluntarily disclose overclaimed Research and Development (R&D) tax relief.

Companies 2

In May 2024, HMRC announced plans to develop the service, and on 31 December 2024, it was officially launched.

When Can the Service Be Used?

A company can use the service if:

It has claimed too much R&D tax relief.
It is Out of time to amend the tax return, and
It has Corporation Tax to pay or tax credits to repay.

When Should the Service Not Be Used?

The service should not be used if:

The company is still within the time limit to amend the tax return.
The company’s behavior was Deliberate.
- In this case, the Contractual Disclosure Facility (CDF) should be used instead (see below).
There is no Corporation Tax to pay or no tax credits to repay.
- In this case, taxpayers should contact This email address is being protected from spambots. You need JavaScript enabled to view it. providing a copy of the revised computation, an explanation of the error and the nature of behaviour that caused the inaccuracy.

The R&D Disclosure Service

To make a disclosure, taxpayers will be required to submit the online form and upload supporting calculations.
At the end of the form, there’s a letter of offer that can be submitted to HMRC as part of the contract settlement.
A payment reference number will be provided within 15 calendar days of making the disclosure.
- It is recommended that the company uses the reference and pays the amount owed to HMRC as soon as possible unless a time-to-pay arrangement has been agreed.
HMRC will check the disclosure within 30 calendar days and will either:
- Send a letter of acceptance.
- Request more information.
- Reject the offer.

HMRC's guidance sets out the information required to prepare a disclosure, as well as how to calculate the number of accounting periods the disclosure should cover, and how to calculate penalties and interest due.

Disclosures made using the digital R&D Disclosure Service can cover four to six years, depending on the taxpayer's behaviour. If the taxpayers' behaviour was deliberate The CDF should be used instead (see below).

Agents

Agents can use the R&D Disclosure Service on behalf of a client.
If you are not the company’s authorised agent, a COMP1a form will be required to temporarily authorise a company's tax adviser to deal with HMRC.

The Contractual Disclosure Facility (CDF)

The Contractual Disclosure Facility (CDF) should be used where deliberate behaviour caused a loss to HMRC of any of the taxes, duties, levies, or payments it administers.
Deliberate behaviour is when you knew you owed tax but chose not to tell HMRC, or if you knew the figures on your tax return were wrong when you submitted it. HMRC may go back up to 20 years if it opens an enquiry based on a taxpayer deliberately concealing their income or gains.
If you enter into the CDF contract and make a complete and accurate disclosure of all your deliberate behaviour, HMRC will not open a criminal investigation. The CDF is the only way to make a disclosure that provides this assurance.

Useful guides on this topic

Research & Development Tax Reliefs: At a glance
What is Research and Development (R&D) relief? What is the Merged RDEC scheme? What is the SME credit scheme? What is the Enhanced R&D Intensive Support (ERIS) scheme? Which R&D Relief can you claim? What are the rates of relief?

Time limits for tax assessments, claims and refunds
What are the time limits for claiming a tax refund? How far can HMRC go back and raise an assessment? How many years back can a taxpayer appeal? What are the time limits for correcting a tax return?

Penalties: Deliberate Behaviour
What penalties apply to deliberate behaviour? What is deliberate behaviour?

Contractual Disclosure Facility (CDF)
What is HMRC's Contractual Disclosure Facility (CDF)? How does it work? What must taxpayers do under the CDF?

External links

HMRC Guidance: Tell HMRC if you've claimed too much Research and Development (R&D) tax relief

Popular