R&D relief – upcoming changes to CT600L

Certain taxpayers may encounter issues when these changes are first launched, though HMRC have said that these should be resolved by June.  Further information will be posted on GOV.UK in April, as well as included in HMRC’s Agent Update for April.

In the meantime, HMRC have indicated that these messages will be along the following lines:

“In 2021, HMRC introduced a supplementary form CT600L for companies claiming either of the following credits:

• Small and Medium Enterprise (SME) Research and Development Payable Tax Credit
• Research and Development Expenditure Credit

Companies only claiming SME Research and Development Enhanced Expenditure are not required to complete this supplementary form and just use Box 660 on the CT600 to report their claim.

HMRC are aware that, due to a recent update to the CT600 and CT600L forms, a small number of customers may have online filing issues as a result of some restrictions within the revised HMRC Corporation Tax online service.

1. Companies claiming SME Research and Development Enhanced Expenditure but not SME Payable Tax Credit or Research and Development Expenditure Credit

Customers will only be affected if:

• their accounting period starts on or after 1st April 2022

and

• ​​they are only claiming SME Research and Development Enhanced Expenditure (included in box 660) but no other Research and Development tax relief so would not be completing a CT600L.

2. Companies claiming Research and Development Expenditure Credit and reporting Income Tax deducted from profits

Customers will only be affected if they are reporting:

• an amount carried forward under section 104N(2), step 2 of the Corporation Tax Act 2009, from a previous accounting period (included in box L5)

and

• Income Tax deducted from profits (included in box L35)

Both of these services will be updated by 31 May 2022 to fix the issues and affected customers should wait until then to file their returns.

If a customer has a deadline or an urgent requirement to file their return before 31 May 2022, HMRC will accept a paper return for these exceptional cases. In this instance, a paper return should include:

• form WT1, explain (in box 6) which of the two above issues apply, either an inability to complete box 660 in the CT600 or that the Research and Development claim includes Income Tax deducted from profits – place this form on top of the return.
• form CT600
• form CT600L
• their accounts and computations

Send these to:

Corporation Tax Services

HM Revenue and Customs

BX9 1AX

United Kingdom

3. Companies claiming Research and Development Expenditure Credit and reporting an amount of brought forward Step 2 restriction to be carried forward to the next Accounting Period

This is for information only as it will not affect a customer’s ability to submit a CT600L to the HMRC Corporation Tax online service.

A new Pre-step 1 section has been added to the CT600L for customers to report the amount of Step 2 restriction brought forward from previous accounting periods. Any balance not used and carried forward to the next accounting period is captured in new Boxes L8 and L129.

The figure in Box L129 is correctly included in Box L140 – Balance carried forward to next accounting period, but has been captured twice in Box L150 – Total carried forward to next AP. This means that the customer’s software will be reporting an incorrect figure in Box L150 - but this is used by HMRC for statistical purposes only.

The figure in Box L129 will be the one included in Box L5 in the next CT Self-Assessment.

No action by the customer is needed."