HMRC are introducing the CT600L supplementary page for Research and Development (R&D) which must be used for any new or amended submissions from 1 April 2021. There are a number of points we would suggest taxpayers affected by this form should be aware of as we approach this date.
Support in Alphatax
We included support for this form in our V20.1 edition. Alphatax will automatically switch to completing the CT600 (2021) for company tax returns, including the CT600L when it is relevant, from the calendar date 1 April 2021. The CT600L forms part of version 3 of the CT600 and so applies for all accounting periods starting on or after 1 April 2015.
The requirements of the CT600L however can affect the values returned on the CT600 and so in order to avoid changing the presentation of existing, settled R&D claims in the tax computation or return, we have applied a further date control of periods of account ending on or after 1 April 2020. A flag is available on the Submission option statement to manually toggle this application control either way where required.
Out of scope
The form does not capture all details of R&D that may be relevant in a company tax return as it is primarily aimed at identifying tax credits. Accordingly, the SME super-deduction is not included, nor in the majority of cases is the SME tax credit. For RDEC, group claims under s104O and s104N Step 4 and Step 5 claims are also not included. The form CT600L will accordingly not be printed in these scenarios.
HMRC have advised that they plan to update their live service on 6 April 2021. Taxpayers should not attempt to submit a company tax return where the CT600L is required for the five days between 1 and 6 April as e-filing will fail. Note that these dates straddle the Easter bank holiday weekend.
Having first been raised by us, HMRC have confirmed that there is a fault in their e-filing validation rules for a limited number of scenarios relating to brought forward RDEC amounts. Specifically, these are Step 3 amounts brought forward included in box L50 and/or Step 2 amounts brought forward where they are not fully set against the CT liability of the period. In these cases, populating the CT600L boxes in line with the legislative calculation produces an e-filing failure.
We are in the process of liaising with HMRC on their resolution, and HMRC have advised that they plan to issue a further e-filing service update on 21 May. We intend to include support for changes introduced by HMRC here in our V21.0 edition of Alphatax which is presently planned for release in June.