HMRC are concerned that the current generous Research & Development (R&D) tax relief is being abused by unscrupulous taxpayers and their advisers.
A number of procedural changes will come into force from April 2023 designed to ‘tighten up’ on the current regime and make it more difficult for bogus claims to be made, most notably:-
Claimants which have not made an R&D claim in any of the three previous accounting periods which want to make a claim will need to notify HMRC of their intention to make a claim within six months of the end of the accounting period or their claim will be invalid.
Claims will need to be supported by information relating to the nature of the qualifying activities and detailing the eligible expenditure. Whilst it has always been good practice to do this, it will now be required for a valid claim. The claim will also need to be signed off by a senior member of the company who is responsible for the claim and must disclose the name of the advisers assisting with the claim.
The government appears to have targeted claims by smaller companies (SMEs) in particular as it will also reduce the super-deduction available for qualifying R&D expenditure from 130% to 86% and the tax credit that can be claimed for R&D losses surrendered is to be reduced from 14.5% to 10%. Thus, the benefit of the SME scheme is becoming more aligned with the less advantageous large company scheme (RDEC).
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Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.
