R&D Tax Relief: HMRC Accepts Late Claims for Reimbursed Employee Expenses

Tuesday, September 26 2017

On 14 August, HMRC announced that it will accept amendments to research and development (“R&D”) tax relief claims to include eligible reimbursed employee expenses as part of qualifying staff costs, if the revised claim is submitted by 31 January 2018.

Change in practice

This reflects a change in practice for HMRC, which previously argued against reimbursed employee expenses being included within R&D tax relief claims.  Following three years of uncertainty and conflicting statements, the new guidance was published in October 2016. 

Whilst this guidance is very welcome, it has created a potential problem as some companies and their advisers will have looked at previous HMRC statements and concluded that it wasn’t sensible to include reimbursed employee expenses in their claims. 

As R&D tax relief claims must be made within two years from the end of the accounting period they relate to, it may not always be possible to simply go back and revise the claim.  HMRC’s recent announcement makes it clear that it will accept late claims for the inclusion of reimbursed expenses within an R&D tax relief claim, subject to certain conditions.

Making a claim

It will only be possible to amend claims for R&D tax relief originally made on or after 9 October 2014, in relation to periods ending between 9 October 2012 and 31 January 2016.

The company will also need to show that the original claim would not have been restricted (to exclude reimbursed employee expenses) had the company been able to rely on the October 2016 guidance. 

Please get in touch with your usual Ryecroft Glenton contact on 0191 281 1292 if you think you may be eligible to make a late claim for reimbursed employee expenses, or if you would like to discuss any of the above in further detail.  

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