Additional Information Form (AIF): An HMRC requirement for R&D tax relief

The Additional Information Form (AIF) is a crucial development in the R&D tax relief landscape, introduced by HMRC in August 2023. This mandatory form aims to enhance the transparency and accuracy of R&D tax relief claims, ensuring that only legitimate claims are processed. The introduction of the AIF marks a significant shift in how businesses document and submit their R&D activities, providing HMRC with detailed insights into the nature and scope of the projects being claimed.

Why was the Additional Information Form (AIF) Introduced?

The primary reason for introducing the AIF was to combat the rising levels of non-compliance and fraud associated with R&D tax relief claims. By requiring businesses to submit comprehensive details about their R&D projects, including the scientific or technological advancements sought and the uncertainties faced, HMRC can better assess the validity of each claim. This move not only protects the integrity of the R&D tax relief scheme but also ensures that taxpayer money is used effectively to support genuine innovation.

Which businesses are affected by the AIF (Additional Information Form)?

The AIF affects all businesses seeking to claim R&D tax relief, regardless of their size or industry. Both small and medium-sized enterprises (SMEs) and larger companies must now provide detailed project descriptions, cost breakdowns, and evidence of the R&D activities undertaken. This increased level of documentation can be challenging for some businesses, particularly those with limited resources or experience in preparing such detailed claims. However, it also brings about a more level playing field, ensuring that all claimants adhere to the same standards of transparency and accuracy.

Read about the changes to R&D in 2024

When do I need to submit the AIF?

The Additional Information Form (AIF) must be submitted before or on the same day as your Company Tax Return (CT600). If you submit the tax return before the AIF, your R&D tax relief claim will be rejected. Therefore, it’s crucial to ensure the AIF is submitted first, followed by the tax return.

Who needs to submit the AIF?

The Additional Information Form (AIF) must be submitted by any business seeking to claim R&D tax relief or the R&D Expenditure Credit (RDEC) for accounting periods beginning on or after April 1, 2023. This includes:

1. First-Time Claimants: Businesses claiming R&D tax relief for the first time.
2. Returning Claimants: Businesses that have not made an R&D claim within the last three years.
3. All Claimants: Any business, regardless of size or industry, that is making an R&D tax relief claim for the specified accounting periods

The AIF can be completed and submitted by a representative of the company or an agent, such as FI Group (R&D tax specialists), acting on behalf of the company.

What are the key details I need to submit on the AIF application?

Category	Details
Company Information	– Unique Taxpayer Reference (UTR) – Employer PAYE reference number – VAT registration number – Standard Industrial Classification (SIC) code – For Northern Ireland companies: Company Registration Number (CRN) and registered business address
Contact Information	– Main senior internal R&D contact (e.g., company director) – Details of all agents involved in the R&D claim
Accounting Period	– Start and end dates of the accounting period, matching the Company Tax Return
R&D Intensity Details	– Total relevant costs – Connected companies’ relevant R&D and total costs – Qualifying R&D expenditure
Project Details	– Description of projects, depending on the number of projects claimed – For 1-3 projects: Describe each project – For 4-10 projects: Select projects accounting for at least half of the qualifying expenditure – For more than 10 projects: Select the top 10 projects with the highest qualifying expenditure

For guidance on how to complete the Additional Information Form, a qualified R&D tax expert may be best placed to advise you on the process.

Describing Each R&D Project for the Additional Information Form

When completing the Additional Information Form (AIF) for R&D tax relief, it’s essential to provide detailed descriptions of each project. Here’s a guide to help you:

Main Field of Science or Technology

Provide a brief description of the field of science or technology related to the project. Use the following terminology:

• Science: The systematic study of the nature and behaviour of the physical and material universe.
• Technology: The practical application of scientific principles or knowledge.
• Mathematical Advances: From April 1, 2023, mathematical advances are treated as science, whether or not they represent the physical and material universe.

Baseline Level of Science or Technology

Describe the existing level of knowledge or capability at the project’s start:

• Improving Existing Materials or Devices: Describe their features and capabilities before the project.
• Developing New Knowledge: Describe what was already known before the project began.

Advance in Scientific or Technological Knowledge

Describe the intended advance using the baseline level as a comparison. This could include:

• Creating new processes, materials, devices, products, or services.
• Significantly improving existing ones to save costs or reduce waste.
• Using science or technology to replicate the effects of current processes in new or improved ways.

Scientific or Technological Uncertainties

Detail the uncertainties faced, such as:

• Uncertainty about the feasibility of creating or improving a product or process.
• Challenges in determining how to achieve the desired advancements.

Explain:

• What is preventing the achievement of the advance.
• Why it is a technological or scientific uncertainty for the industry, not just your company.
• If a competent professional in the field would be uncertain about how to achieve the advance.

Overcoming Uncertainties

Describe the direct R&D activities and qualifying indirect activities used to resolve uncertainties:

• Direct Activities: Creating or adapting software, materials, or equipment; planning; designing, testing, and analysis.
• Indirect Activities: Include qualifying costs incurred on these activities.

What are the common mistakes to avoid when submitting the AIF?

When submitting the Additional Information Form (AIF) for R&D tax relief, businesses often encounter common errors that can lead to delays or rejections. Here are some of the most frequent mistakes:

1. Incomplete Project Descriptions: Failing to provide detailed descriptions of the R&D projects, including the scientific or technological advancements sought and the uncertainties faced, can result in HMRC not fully understanding the scope of the work.
2. Incorrect Cost Calculations: Miscalculating or incorrectly categorising qualifying expenditures, such as staff costs, materials, and software, can lead to inaccuracies in the claim.
3. Late Submission: Submitting the AIF after the Company Tax Return (CT600) can cause the claim to be rejected. The AIF must be submitted before or on the same day as the tax return.
4. Missing Supporting Documents: Not providing adequate supporting documentation, such as financial records and evidence of R&D activities, can weaken the claim and lead to further inquiries from HMRC.
5. Claiming Under the Wrong Scheme: Some companies mistakenly claim SME R&D tax relief when they should be using the R&D Expenditure Credit (RDEC) scheme, especially if they received notified state aid for the R&D project.
6. Errors in Company Details: Providing incorrect or incomplete company details, such as the wrong accounting period or connected companies, can cause issues with the claim.

For guidance on how to complete the Additional Information Form, a qualified R&D tax expert may be best placed to advise you on the process.

What do I need to do in response to these changes?

You may need to review your methodology and assess how robust your approach is in light of these new requirements and HMRC’s enhanced compliance activities. It’s important to consider this before starting to prepare your R&D claim to avoid additional work when submitting the claim. FI Group is well-positioned to assist, with a proven track record of preparing detailed project descriptions to support our clients’ claims. Our team can provide additional capacity for in-house teams adapting to the new requirements. Contact us to see how we can help.