In the 2021 Autumn Budget, the government announced reforms to R&D tax relief which included expanding qualifying expenditure, refocusing support towards innovation in the UK, and tackling abuse.
As R&D claims have increased over the years, so have concerns regarding boundary-pushing and abuse and JS welcomes the government’s measures to target abuse and improve compliance, which includes the implementation of changes to making a claim.
From 1 April 2023, HMRC is pushing for all R&D claims (either for a deduction or a tax credit) to be made digitally (except for those companies exempt from the requirement to deliver a Company Tax Return online). This will include project information that answers the following questions:
- What is the main field of science or technology?
- What was the baseline level of science or technology that you planned to advance?
- What advance in that scientific or technical knowledge did you aim to achieve?
- What scientific or technological uncertainties did you face?
- How did your project seek to overcome these uncertainties?
In addition, each claim will need to be endorsed by a named senior officer of the company and claims will need to include details of any agent who has advised the company on compiling the claim.
HMRC considers these changes necessary to protect the integrity of the R&D reliefs, with further measures being considered to discourage unscrupulous agents from exploiting the SME scheme. HMRC have already allocated additional resources to R&D tax relief compliance, with a new cross-disciplinary team focused on abuse.
At JS we already have these measures in place as part of our ‘best practice’ policy. If you would like a free, confidential discussion regarding your R&D claims or are considering making a claim for the first time, our R&D tax specialists are available to help.