Time to take the creditTax Alert - October 2009 |
You may be progressing your Research & Development (R & D) tax credit claim preparation, but what are the deadlines for filing the claim with the Inland Revenue?
An R&D tax credit claim containing the claim figure will ordinarily be included in your tax return for the 2009 income year. If required you will then have a further 30 days from the due date of the tax return to file a detailed statement providing further information in support of the amount claimed. This information must be submitted electronically to the Inland Revenue, and the return will be held back from processing until the detailed statement is submitted. For most taxpayers with a valid extension of time (EOT), the return will fall due by 31 March 2010.
If you want to change the amount of R&D tax credit claimed in your income tax return, the usual fourmonth response period in which you can amend a tax return by issuing a notice of proposed adjustment (NOPA) is extended to two years from the date the tax return was filed, solely in respect of R&D claims. A NOPA in respect of other issues is subject to the usual timeframes.
What if I miss the boat?
If you are entitled but have neglected to claim a R&D tax credit amount in your 2009 income tax return, you have another two years from the due date of the tax return to submit a detailed statement - this could be up to 31 March 2012 if you have an EOT. This must be done via the NOPA process if you wish to have the tax return reassessed to include a claim for an R&D tax credit.
This additional time may sound attractive, but is not necessarily the most beneficial method. There are important potential factors that must be considered:
- There will be cases where delaying the submission of a detailed statement could have an adverse affect on the value or accuracy of the claim itself. If you defer the preparation of your detailed statement, you may have trouble substantiating your claim. Where you are unable to recall accurately the detail of the work done and provide supporting evidence of the claim figure, or key staff have moved on, the value of the claim could be reduced.
- In addition, if you are in a loss making position, you will have to wait to receive any refund whilst if you are in a tax paying position, you will face a delay in receiving the benefit through a reduction in your residual income tax.
- Furthermore, there could be administrative costs of filing a NOPA and working through the revised use of money interest calculation, which could erode some of the benefit sought.
When should I claim?
Our recommended approach is to prepare the claim as soon as possible in order to ensure that the value of it is maximised whilst minimising the time required for the claim process. The Inland Revenue's approach to investigations of R & D tax credit claims is still in the early stages, and further knowledge of areas likely to be challenged will be useful in ensuring that these are directly addressed in the claim. We are able to provide guidance on this area by providing insight from our experiences with the Inland Revenue.
For further information please contact the Deloitte R&D tax team.
Peter Felstead
Partner, Tax
+64 (0) 9 303 0860
Aaron Thorn
Partner, Tax and National R&D Incentives Leader
+64 (0) 3 363 3813