Tell HMRC if you've claimed too much Research and Development (R&D) tax relief
Make a voluntary disclosure for any R&D claims made in error that are out of time to amend on your Company Tax Return.
Who can use the R&D disclosure service
Use the service to tell HMRC if all of the following apply. The company:
- claimed too much R&D tax relief
- cannot amend its tax return to correct an R&D claim, because the time limit to do this has passed
- needs to pay further Corporation Tax or pay back overpaid tax credits for R&D relief
You can make a disclosure either:
- about the company’s tax affairs (if you’re a director, or company secretary)
- on behalf of someone else (for example, if you’re a tax adviser)
When you should not use it
Do not use the R&D disclosure service if:
- the company is within the time limit to amend the Company Tax Return
- the company’s behaviour was deliberate — use the Contractual Disclosure Facility (CDF) if when the claim was made, the company knew either:
- they owed tax or had overclaimed R&D tax credits but chose not to tell HMRC
- the figures on the tax return were wrong on submission
- the company is disclosing something other than overclaimed R&D tax relief — read how to make a voluntary disclosure for unpaid tax
- there is no Corporation Tax to pay and no tax credit to pay back — instead you can contact RD.IncentivesReliefs@hmrc.gov.uk including:
- R&D Disclosure overstated losses as the heading
- revised computations reflecting the correct position
- an explanation of how the error arose
- your view of the nature of the behaviour that led to the inaccuracy, supported by evidence-based reasons
The company may be charged extra interest and penalties if they wait for HMRC to contact them. HMRC may also decide to open a criminal investigation.
How the R&D disclosure service works
To make a disclosure, submit the online form (read section ‘Make your disclosure’) and upload your calculations. You do not need to tell HMRC about your intentions before you use this service.
At the end of the form, there’s a letter of offer you can submit to HMRC as part of a contract settlement. To do this, you must have consent from a director of your company, or someone else in the company who has authority to enter business contracts.
After you submit your disclosure, HMRC will either:
- write to you with a letter of acceptance
- contact you for more information
You’ll receive a payment reference number, usually within 15 calendar days of making your disclosure.
Prepare your disclosure
Information you’ll need
The disclosure service will ask you for the following information:
- name of the company making the disclosure
- the company’s Unique Taxpayer Reference and registered business address
- the company’s Standard Industrial Classification (SIC code)
- name of the company’s HMRC customer compliance manager, if you have one
- name of the agent who prepared the original claim (if known)
- the accounting periods the disclosure relates to
- the reasons for the inaccuracy
- your calculations of how much you owe — prepare these before you start the form to avoid the form timing you out
If you’re an agent
If you’re an agent but not the company’s authorised agent, you’ll also need to complete and upload a COMP1a form to authorise HMRC to temporarily deal with your tax adviser.
Work out how much the company owes HMRC
The offer the company makes to HMRC will usually be the full amount it owes, including any:
- Corporation Tax the company has not paid
- R&D small or medium sized enterprise (SME) tax credits or R&D expenditure credit (RDEC) to repay
- penalties — read section ‘How to work out the penalties due’
- interest — read section ‘How to work out the interest due’
If your R&D calculations are complex, you may want to get independent professional advice.
To work out how much the company owes, you need to know the following:
- the number of accounting periods the company needs to disclose
- if the company would like to consider voluntary restitution
- how much R&D tax relief the company overclaimed
- how to work out the penalties due
- how to work out the interest due
Work out how many accounting periods you need to disclose
This depends on why the company has not told HMRC about the overclaimed R&D tax relief or paid the right amount of tax. You must decide if this was:
- despite the company taking reasonable care
- because the company was careless and did not take reasonable care to get the claim right
- because it was something the company did deliberately
For guidance on penalty behaviours please read the factsheet in the ‘How to workout the penalties due’ section.
There are time limits within which HMRC can make assessments to recover any tax or overpaid relief.
The company’s disclosure should include accounting periods up to a maximum of either:
- 4 years from the end of the relevant tax period if they’ve taken reasonable care
- 6 years from the end of the relevant tax period if careless
If the company has deliberately overclaimed R&D tax relief, you need to use the Contractual Disclosure Facility instead.
Voluntary restitution
Voluntary restitution is where the taxpayer voluntarily pays any tax owed and interest when they are not required to do so by law.
HMRC may accept a voluntary proposal if we agree that the relevant legal time limits to recover unpaid tax have passed.
If the company wants to voluntarily repay any amounts, you can include them in the relevant sections of the form.
Prepare your Corporation Tax and R&D tax relief computation for the disclosure
The computation needs to include:
- the full original and a revised Corporation Tax computation for the accounting period — not just the part which refers to the R&D claims
- a breakdown of both the original qualifying expenditure included in the R&D claim
and revised qualifying expenditure as a result of the disclosure — this breakdown needs to outline both the:
- categories of qualifying expenditure
- amounts claimed in each of those categories
- computations of group relief amendments and the name, UTR and revised Corporation Tax computations for the impacted companies
You must provide your workings to show how you arrived at your final disclosure figures for any:
- repayments to HMRC of R&D small or medium sized enterprise tax credit
- repayments to HMRC of R&D expenditure credit
- payments to HMRC of Corporation Tax
For each accounting period, you’ll need to work out the amount the company owes. Then upload your computation into your disclosure. You can upload your computation as a:
- JPEG
- XLSX
- DOCX
- PPTX
Files uploaded must not be larger than 10MB.
How to work out the penalties due
HMRC can charge penalties if the company has sent an inaccurate return. The company will not have to pay interest on these penalties if they pay them on time.
A disclosure is unprompted if you have no reason to believe that HMRC have discovered or are about to discover the inaccuracy, otherwise it is prompted.
Penalties will vary depending on the company’s circumstances. They’ll usually be lower if the company make a voluntary disclosure.
In specific circumstances, it may not be appropriate to allow you the full reductions for disclosure. For example, if that company has taken a significant period to correct their non-compliance, HMRC may not agree to a full reduction for disclosure.
In such cases, it’s unlikely that we’ll reduce the company’s penalty by more than 10 percentage points above the minimum of the statutory range. For this purpose we would normally consider a significant period to be over 3 years from the date of the inaccuracy, or less where the overall disclosure covers a longer period.
Use the factsheet penalties for inaccuracies in returns. For each accounting period, you’ll need to work out:
- how to reduce the appropriate penalty percentage from the penalty range
- how much of a penalty the company owes
You’ll then need to:
- upload your workings and reasoning into the disclosure
- include any suspension conditions you would like HMRC to consider
Your rights when considering penalties for your disclosure
Under Article 6 of the European Convention on Human Rights, you have the right:
- to seek help from a professional adviser
- to have the matter of penalties dealt with without unreasonable delay
- not to incriminate yourself
When you use the service to disclose that the company owe a penalty, you’ll be giving up your right to silence under Article 6. This means we can use anything you disclose when we consider penalties.
How much the company co-operates with us and answer our questions about penalties will still be for you to decide.
More information about Article 6, can be found at Compliance checks: The Human Rights Act and penalties.
How to work out the interest due
Any tax the company owe to HMRC will be classified as a late payment, so they’ll also have to pay interest.
For Corporation Tax, interest is charged daily from the date the tax was due until the date it’s paid.
For overpaid R&D SME or RDEC tax credits for accounting periods beginning:
- before 1 April 2023, HMRC will not charge interest if we can still open an enquiry
- on or after 1 April 2023, interest is charged from the date of payment until the date repaid
Read the HMRC manual EM1510 for more information about enquiry time limits.
For each accounting period, you’ll need to use the Corporation Tax interest rates to work out the interest the company owes. Then upload your calculations into your disclosure.
Make your disclosure
Once you’ve worked out how much the company owes HMRC, you need to enter the company’s offer onto the form. You’ll find this included in the letter of offer at the end of your disclosure.
Some agents deduct their fees before paying clients the balance of their R&D claim. If an agent made your company’s claim, you must include the full amount of overclaimed R&D relief in your offer, not the net amount you received.
If the company cannot pay what it owes in full, you can use the service to ask for more time. HMRC will usually ask the company to pay the full amount within 12 months.
To pay the amount the company owes, a Government Gateway user ID and password is required. If the company does not have a user ID, you can create one the first time you register.
Save your progress
If you start the form but do not finish it, we’ll save the information for 28 calendar days. If you need longer than this, log back in within 28 calendar days and save it again so you do not lose the information. You must submit the form within 90 calendar days of starting it.
At the end of the form you will have the option to print a copy of your disclosure.
Make a payment after your disclosure
HMRC will write to you with the payment reference number (PRN), usually within 15 calendar days. When you receive it, we suggest the company pays the amount owed.
If HMRC determines that the offer is not enough, the company may still have more to pay.
If you’ve asked for more time to pay, HMRC will contact you about this within 30 calendar days of the disclosure submission. You’ll still get a payment reference number, and we suggest the company pays as much of the offer amount as it can, as soon as possible.
If the time to pay is agreed, this will be outlined in the letter of acceptance.
Once the letter of acceptance has been issued, if the company does not pay what it owes HMRC can take steps to recover the money.
Ways to pay
Use the payment reference number to pay the amount owed. You can pay by a range of methods but the most secure way to pay is electronically.
What happens next
HMRC will check your disclosure and within 30 calendar days, we will either:
- send you a letter of acceptance letting you know we have accepted your offer
- contact you for more information
- contact you to let you know we cannot accept your offer
If you intentionally give incorrect information on your disclosure, HMRC may:
- look at your tax affairs again
- charge you higher penalties
Contact HMRC
If you have not received a payment reference number within 15 calendar days, or have general R&D queries contact RD.IncentivesReliefs@hmrc.gov.uk.
If you’re a large business customer, contact the regional mailbox.
For more information, read HMRC’s compliance approach for large businesses.
For queries relating to your submitted disclosure only, contact details will be provided with the payment reference number.
You can also contact us if you need extra support if your health condition or personal circumstances make it difficult when you contact HMRC.
Further guidance
Read the ‘General information’ section in our Make a voluntary disclosure to HMRC guidance for information on:
- your rights and obligations
- what to do if you’re unhappy with HMRC’s service
- our privacy and confidentiality policy
- the Data Protection Act
Guidance on R&D for tax purposes
HMRC has recently published Guidelines for Compliance to help you:
- find out if your company’s work qualifies as Research and Development (R&D) for tax purposes
- avoid making common mistakes