Finance (No. 2) Act 2023

Part 3 U.K. Amendments to Schedule 18 to FA 1998

Introduction U.K.

10 Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.

Power of HMRC to collect overpaid R&D tax relief or expenditure credit U.K.

11 In paragraph 52 (recovery of excessive repayments etc)—

(a) in sub-paragraph (2) omit paragraphs (bza) and (ba);

(b) for sub-paragraph (2A) substitute—

“(2A) The provisions of paragraphs 41 and 45 to 48 relating to discovery assessments apply to an amount paid to a company by way of—

(a) first-year tax credit under Schedule A1 to the Capital Allowances Act;

(b) R&D expenditure credit under Chapter 6A of Part 3 of the Corporation Tax Act 2009;

(c) R&D tax credit under Chapter 2 or 7 of Part 13 of that Act,

but only to the extent that the company was not, or is no longer, entitled to the credit.”

Time limits for R&D claims U.K.

12 For paragraph 83E (time limit for claims) substitute—

“83E (1) Except where sub-paragraph (3) applies, a claim to which this Part of this Schedule applies may be made, amended or withdrawn at any time up to the last day of the period of—

(a) two years beginning with the last day of the period of account, in a case where the period of account to which the claim relates is not longer than 18 months, or

(b) 42 months beginning with the first day of the period of account, in any other case.

(2) Sub-paragraph (3) applies where—

(a) a company makes a claim for R&D tax relief under Part 13 of the Corporation Tax Act 2009,

(b) the company is not entitled to the relief, and

(c) an officer of Revenue and Customs exercises the power under paragraph 34(2)(b) or (2A) to make an amendment by removing the claim from the company tax return in which it is made.

(3) The company may make, amend or withdraw a claim for R&D expenditure credit under Chapter 6A of Part 3 of the Corporation Tax Act 2009 in respect of eligible expenditure at any time up to whichever is the last of the following dates—

(a) 30 days after notice of the amendment mentioned in sub-paragraph (2)(c) is issued;

(b) if an appeal is brought against that amendment, 30 days after the date on which the appeal is finally determined.

(4) In this paragraph “eligible expenditure” means expenditure—

(a) to which the claim mentioned in sub-paragraph (2)(a) relates, and

(b) in respect of which the company is entitled to R&D expenditure credit.

(5) A claim to which this Part of this Schedule applies may be made, amended or withdrawn after the end of the period mentioned in sub-paragraph (1) or (3) (as the case may be) if an officer of Revenue and Customs allows it.”

Requirement to provide additional information in relation to R&D claims U.K.

13 In Part 9A (company tax returns etc: claims for R&D expenditure credits or R&D tax relief), after paragraph 83E (substituted by paragraph 12) insert—

“Additional information to be provided in relation to claim

83EA (1) A claim to which this Part of this Schedule applies is invalid unless the claimant company has provided information to an officer of Revenue and Customs in accordance with regulations under sub-paragraph (2) not later than the date on which the claim is made or amended by the company in accordance with paragraph 83E.

(2) The Commissioners for Revenue and Customs may by regulations specify, in relation to a claim to which this Part of this Schedule applies—

(a) information to be provided by the claimant company;

(b) the form and manner in which the information is to be provided.”

Power of HMRC to remove R&D claims made in error from return U.K.

14 In Part 9A (claims for R&D expenditure credits or R&D tax relief), after paragraph 83EA (inserted by paragraph 13) insert—

“Removal from return of claims made in error

83EB (1) This paragraph applies, in relation to a claim to which this Part of this Schedule applies (the “original claim”), where an officer of Revenue and Customs—

(a) reasonably believes that a claimant company has failed to comply with a requirement relating to the making of the claim (and accordingly that the claim has been made in error), and

(b) exercises the power under paragraph 16(1) to make a correction by removing the claim from the company tax return in which it is made.

(2) Sub-paragraphs (4) and (5) of paragraph 16 do not apply in relation to the correction (and accordingly the claimant company may not reject the correction).

(3) The claimant company may, within 90 days beginning with the date of the notice issued under paragraph 16(3), send written representations to an officer of Revenue and Customs objecting to the notice on the grounds that a matter stated in the notice was incorrect.

(4) An officer of Revenue and Customs must consider any representations made under sub-paragraph (3).

(5) Having considered the representations, the officer must determine whether to—

(a) confirm the notice, or

(b) withdraw the notice,

and must notify the claimant company accordingly.

(6) Nothing in sub-paragraph (2) prevents the claimant company from amending its company tax return to make a new claim to which this Part of this Schedule would apply in respect of the expenditure to which the original claim related (but see sub-paragraph (7)).

(7) Where, in relation to the original claim—

(a) a claim notification (within the meaning of section 1142A of the Corporation Tax Act 2009) was required to be made, and

(b) no claim notification was made,

the company may not make a new claim to which this Part of this Schedule would apply in respect of the expenditure to which the original claim related.”