Back to blog

The Additional Information Form (AIF): What You Need To Know

The R&D tax credit schemes are vital to many innovative UK businesses, but can be complicated. Changes to the SME and RDEC rates, the merged scheme, pre-notification, overseas costs and subcontracting rules have all been on the docket recently, affecting different claimants in different ways.

However, one change that affects all claims is the introduction of the Additional Information Form (AIF). Introduced in August 2023, the AIF is one of HMRC’s compliance measures.

We’ve written up a guide to the AIF here, so you can navigate these changes with as little disruption to your claim as possible.

The Additional Information Form (AIF) is an extra form that claimants need to submit before their claim is made. It clarifies what they’re claiming for and why they think it’s qualifying.

It was introduced in August 2023 as a way to reduce spurious claims being made. To reduce error and fraud in the scheme, HMRC now requires companies to provide project and expenditure details, to check at a basic level if the claim is qualifying. The AIF is used to assess the risk of a claim before it is investigated further by HMRC’s team.

As a measure against disreputable agents or individuals who submit claims without the company’s go ahead, the AIF requires specific contact details and submission through an official log in.

The results of the AIF requirement are already showing up in HMRC’s statistics. Last year saw a decrease in the volume of claims made, particularly in the SME scheme which saw a 23% decline for claims for the 2022-23 period compared to the 2021-22 period. This suggests that potentially ineligible claims are already being weeded out.

The AIF requirement applies to all R&D tax claims made on or after 8^th August 2023. This goes for the SME scheme, the RDEC scheme and the merged scheme. Every company submitting an R&D tax credit claim must also submit an AIF.

Following the apparent success of the AIF in the R&D tax scheme, HMRC even introduced a similar requirement for other tax relief schemes, such as the creative tax relief schemes.

Accounting Period

You must make a separate R&D tax claim for each accounting period, so it makes sense that each accounting period should have its own AIF.

However, you’ll need to submit two AIFs for an extended accounting period; one for the first 12 months and another for the following short accounting period.

Company Details

HMRC needs to know some basic information about your company:

• Unique Taxpayer Reference (UTR)
• employer PAYE reference number
• VAT registration number
• Standard industrial classification (SIC) code

Contact Details

To reduce the chance of a third party making a claim on behalf of your business without your knowledge, you need to provide the contact details of who is responsible for the claim.

You should provide the main senior internal R&D contact who is responsible for the R&D claim. This is usually a company director or lead finance contact.

Any third-party agent involved in preparing or submitting the claim should also be included. This includes specialist R&D tax advisors (like us!), but also any accountants who have helped prepare the claim.

R&D Qualifying Expenditure

You’ll need to provide a summary of the expenditure for each scheme you’re claiming under.

In most cases, you’ll only be claiming under one scheme (SME scheme, RDEC scheme or the merged scheme). However, if you are claiming some projects under the SME scheme and some under the RDEC scheme, you’ll need to separate those out. If you claim under the merged scheme, you cannot claim costs under any other scheme.

The AIF requests totals for the expenditure in each cost category claimed and a total for the qualifying direct costs versus the qualifying indirect costs. You’ll also need to separate out the total costs per project later in the AIF.

Connected Companies

The AIF requires you to include the details of any connected companies. This is only relevant if they were connected within the accounting period being claimed for (even if it was only for a day!).

Enhanced R&D intensive support (ERIS)

The enhanced R&D intensive support (ERIS) scheme offers loss-making SMEs the opportunity to claim a higher rate of relief.

Companies can claim under the ERIS scheme if they:

• are an SME
• make a trading loss for tax purposes before relief is calculated
• meet the R&D intensity condition:
  • at least 40% of total costs are R&D (for expenditure incurred on or after 1 April 2023)
  • at least 30% of total costs are R&D (for accounting periods beginning on or after 1 April 2024)

To prove that you meet the R&D intensity condition, you’ll need to use the AIF to provide:

• the company’s total relevant costs for the period
• connected companies’ relevant R&D and total costs
• the company’s qualifying R&D expenditure

The main field of science or technology

Your R&D project must be in a field of science or technology. You should specify further than this; for example, “mechanical engineering”, “information technology” or “pharmaceutical development”.

The baseline level of science or technology

Since a key qualification criterion of the R&D tax scheme is having an advance in the field, you need to explain what the field looked like before so HMRC has something to compare your advance to.

This should be a description of the existing state of the art and the knowledge and capabilities in the field at the outset of your project.

You may want to discuss competitor technologies, or the outcomes of a literature review. If you’re improving on a specific product, explain its capabilities at the beginning of the project. If you’re developing something entirely new, describe what you knew before starting.

The advance in scientific or technological knowledge

An advance is crucial to your R&D being eligible. You need to show how you sought to improve upon the state of the art in the wider field. You may be able to quantify your advance (e.g., “ten times faster”, “half the amount of energy required”) or it may be intangible (e.g., “new secure method of passing information electronically”, “new knowledge in the field of pharmaceuticals”).

You should describe the advance in comparison to the baseline already outlined and it should be clear that your advance is “better” than the existing options.

The scientific or technological uncertainties

You should include the scientific and technological uncertainties you faced when trying to achieve your advance. It needs to be clear why your expert team could not easily work out how to achieve the advance.

The uncertainties should be relatively specific to the project. The limitations of the existing science or technology can be discussed here.

How your project seeks to overcome these uncertainties

This section should be a brief outline of the R&D activities completed in the period. There’s no need to go into too much detail; a description of the methods used to overcome the uncertainties, the tests conducted and their results, and the big changes you made based on those results should be enough.

HMRC should be clear on why the R&D project was not straightforward and whether the uncertainties were resolved. If they weren’t resolved, it should be clear why not.

Amount claimed per project

As discussed above, for each project claimed you need to provide a total of the expenditure.

The amount of text needed in the project descriptions depends on the question. For example, the field of science or technology will require less information than the activities conducted in the period.

Additionally, the complexity and size of the project will have an impact on the amount required. A project that costs over £1 million will require more justification than a £20,000 project.

However, you should also steer clear of writing too much or providing too much field-specific detail. If HMRC can’t understand your projects, they may ask for clarification, which is just doubling your work. Stick to layman’s terms, where possible.

Using a specialist R&D tax advisor can avoid these tricky questions, as they will have a better idea of how much detail is appropriate. When you use Tax Cloud, your answers have a character limit to keep you within a reasonable limit. Our expert team reviews your responses and guides you to a better description, if necessary.

If you’re claiming for 1 to 3 projects, you need to describe all of them.

If you’re claiming for 4 to 9 projects, you can select 3 or more projects to write up, so long as they account for at least half of the total qualifying expenditure.

If you’re claiming for 10 projects or more, you must select the 10 largest projects cost-wise.

For claims which are made across both the SME scheme and the RDEC scheme, the above rules apply separately to the schemes. You’ll need to assess the number of SME projects you have and the number of RDEC projects you have, then apply the above rules to those totals individually.

For example, if you have 8 SME projects and 2 RDEC projects, you’ll need to provide project details for:

• at least 3 SME projects which cover at least 50% of the total qualifying costs
• the 2 RDEC projects

As a representative of the company, you’ll need the Government Gateway user ID and password you used when you registered for Corporation Tax. You can submit using HMRC’s portal for the AIF.

You won’t be able to access the form once it’s been submitted, so save a copy before you submit it.

Unlike the claim notification form, there is no actual deadline for submitting the AIF. The only requirement is that it is submitted before the Company Tax Return (CT600).

The deadline to make a claim for R&D tax is two years after the end of the accounting period. If you submit your CT600 on the last day, you need to make sure you submit your AIF first.

If you don’t submit the AIF first, the R&D tax claim will not be accepted. If you submit your CT600 first, you’ll need to submit your AIF then resubmit the CT600 for the R&D tax credit to be accepted.

Only representatives of the company or registered agents can submit an AIF for a company.

This is not a requirement, but you’ll find most specialist R&D tax agents will write up and submit an additional claim report. This report will include more detailed cost breakdowns and will pre-emptively answer some questions on project qualifications and methodologies used which may be asked in an R&D tax compliance check.

It’s easier to do this work when preparing the claim than months down the line, in the event of a compliance check. With increased levels of scrutiny from HMRC as they try to stamp out error and fraud in the scheme, it’s a good idea to prepare for the worst-case scenario while you’re gathering your project details, instead of scrambling at the last minute.

You can submit supplementary information via email or when you submit your CT600.

At Tax Cloud, we support your claim at all stages, from project identification to submission to HMRC. We review your input, advise changes where necessary and provide a framework for you to accurately record your costs within HMRC’s requirements. We’ll submit the AIF on your behalf as a registered agent.

Get in touch or call us on 0207 118 6045 to learn how we can assist you with your R&D tax credit claims.