R&D tax expert calls for regulation

By Azets

21 Nov 2022

david-kitson.png

One of the region’s leading research and development (R&D) tax experts has welcomed new government measures to prevent abuse and fraud in the in the R&D tax credit scheme but believes more can be done to tackle the root cause of the problem. 

David Kitson, tax partner at Azets in the North West, the UK Top 10 accounting firm, has called for regulation to stop mis-selling of the scheme by rogue advisors.

The call comes following the Chancellor’s Autumn Statement, in which he confirmed reform of the reliefs “to ensure taxpayers’ money is spent as effectively as possible”.

Jeremy Hunt announced a cut to the deduction rate for the SME scheme to 86 per cent and the credit rate to 10 per cent but increased the rate of the separate R&D expenditure credit from 13 per cent to 20 per cent.

David Kitson said: “The overall picture is a significant re-balancing of the tax reliefs available for companies eligible for R&D intensive companies. The impact of these changes will be a reduction of more than 30 per cent in the tax benefit to companies undertaking R&D from April 2023.

“However, on top of the increase of Corporation Tax from 19 per cent to 25 per cent next April, SMEs undertaking innovative work will be hugely disappointed in this announcement, with a big reduction in the amounts available for re-investment in their businesses.

“This will do nothing to stimulate growth in the SME sector of the economy. The R&D expenditure credit (RDEC) and SME schemes will now have broadly the same tax value of around 16 per cent of qualifying cost – though most businesses claiming are SMEs, which makes them less competitive.

“We applaud the proactive steps being taken by government to simplify R&D tax reliefs across all countries and prevent abuse and fraud in the tax credit scheme. However, while making the scheme more difficult to claim under, these do nothing to address the real reason for the abuse, which is the unregulated mis-selling of the scheme by a handful of advisors in the market.”

David Kitson has urged business owners to seek specialist advice from reputable advisors to ensure bona fide claimants don’t miss out, after new data revealed that the total value of R&D tax credits claimed by businesses has fallen for the first time ever – down by £275m in a year.

He added: “£275m represents a significant reduction of R&D tax credits claimed by businesses and even more notable as the first ever decease – thought there could be several contributing factors. It is possible claims are down because of processing delays by HMRC, which have become particularly lengthy in the past year, post-pandemic, and might not yet be showing as claimed.

“It could also be that additional checks by HMRC, as it continues to clamp down on fraudulent claims, is starting to have an effect, with non-qualifying claimants put off from making a claim. The risk is that higher levels of bona fide claimants are also being put off making claims, with lengthy enquiries disrupting cashflow at a critical time and potentially leading to closure.

“For those still making claims, it is likely HMRC’s more aggressive stance has resulted in greater levels of caution and businesses making smaller claims than they are entitled to.”

Latest news

1

REVEALED: Red Rose Awards 2025 winners RRA25 winners pic

REVEALED: Red Rose Awards 2025 winners

14 Mar 2025

2

Cabinet members to consider local government reorganisation Lancashire County Council County Hall

Cabinet members to consider local government reorganisation

13 Mar 2025

3

Council Committee approved the boundary for the first phase of Central Housing Regeneration Scheme The boundary image for the regeneration

Council Committee approved the boundary for the first phase of Central Housing Regeneration Scheme

13 Mar 2025

4

Leyland Trucks celebrates 10,000th DAF XB production milestone Leyland Trucks celebrates 10,000th DAF XB production milestone

Leyland Trucks celebrates 10,000th DAF XB production milestone

12 Mar 2025

5

Lisa Goodwin-Allen to leave Northcote after 23 years Lisa Goodwin Allen

Lisa Goodwin-Allen to leave Northcote after 23 years

12 Mar 2025

Pc Prestonmacan Gif980x120 March
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV121 March/April Launch Event
121 Lancashire Business View Magazine Launch
Networking
20 Mar 2025

LBV121 March/April Launch Event

The Whitakers Museum, Rossendale, BB4 6RE

08:30 - 10:30

Skills Bootcamp in Procurement - Cohort 3
Blue-Modern-Land-Travel-Youtube-Thumbnail-2-1024x576.png.png
LBV Hub Awards
14 Jan 2025 - 18 Mar 2025

Skills Bootcamp in Procurement - Cohort 3

Community & Business Partners CIC, Blackburn, BB2 3UA

09:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

Seasons of Leadership - Spring
jeremy-thomas-FO7bKvgETgQ-unsplash.jpg.jpg
LBV Hub Webinar
18 Mar 2025 - 18 Mar 2025

Seasons of Leadership - Spring

Online, Trawden, BB8 8SW

19:00 - 21:00

Live Work Create: Creative Placemaking.
LiveWorkCreate .png.png
LBV Hub Networking
18 Mar 2025 - 18 Mar 2025

Live Work Create: Creative Placemaking.

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 20:30

The Business Network Central & East Lancashire
LBV Header (18).png.png
LBV Hub Networking
20 Mar 2025 - 20 Feb 2025

The Business Network Central & East Lancashire

Stanley House, Blackburn, BB2 7NP

11:30 - 14:15

The Marketing MeetUp Lancashire
TMM Lancs 30th Jan.jpg.jpg
LBV Hub Networking
25 Mar 2025 - 25 Mar 2025

The Marketing MeetUp Lancashire

The Chubby Duck, Rawtenstall, BB4 6AJ

18:00 - 20:00

Spring Statement 2025 LIVE: Insights with PM+M
Spring Statement 2025 LIVE for website.png.png
LBV Hub Seminars
26 Mar 2025 - 26 Mar 2025

Spring Statement 2025 LIVE: Insights with PM+M

Blackburn Rovers, Blackburn, BB2 4JF

12:00 - 15:00

Preston Freelancer Meet-Up: March
Freelancer Meet-Up March.png.png
LBV Hub Networking
27 Mar 2025 - 27 Mar 2025

Preston Freelancer Meet-Up: March

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

SPARK - The Apprenticeship Marketplace
SPARK24.png.png
LBV Hub Networking
27 Mar 2025 - 27 Feb 2025

SPARK - The Apprenticeship Marketplace

Foster Social Space, University of Central Lancashire, Preston , PR1 2HE

09:00 - 15:00

Preston Tech Connection April Meet-Up: Secret Lives of Alogrithms
PRESTON TECH CONNECTION jan.ai-7.png.png
LBV Hub Networking
01 Apr 2025 - 01 Apr 2025

Preston Tech Connection April Meet-Up: Secret Lives of Alogrithms

Society1, Coworking Space , Preston, PR1 3LT

18:00 - 19:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV120 Online Graphic 1
Subscribe now

Weekly news bulletin