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Talking Tax: October 2022

Author: Adam Spriggs, R&D Tax Director

The last month has been another busy month for the R&D team. An interesting case that stood out was a new client who had ‘previously claimed’ R&D relief for their 2021 year through their former accountant.

New client who had ‘previously claimed’

Zeal began working with the new client on their 2022 R&D claim submission. After refreshing the client on the scheme, criteria and what was claimed for in the previous year, something was discovered which is unfortunately all too common. Their 2021 claim had been submitted without any technical information provided, with the company not even asked any questions. It was identified that all that was claimed for was a few subcontractor invoices.

As the previous accountant was unsure if they could even defend the figures claimed for, they had undervalued the claim by not claiming a proportion of the staff time that was spent on the project. Taking on clients in such circumstances come with risks. Previous claims are often very aggressive and to properly assess the R&D activity, often result in a reduced claim. Additionally, if HMRC raise any queries on new claims and open a discovery assessment, it can result in having to defend the previous claim.

With the increased focus on what information is required to be included to support claims from next year, it’s important that any R&D claims being submitted include all the necessary information to support the expenditure being claimed.

HMRC R&D Consultations and Sub-Committees

In the coming months HMRC is requesting feedback on two consultations. The first is around the annual statistics that are usually released in September, and the removal of certain tables relating to geographical and sectoral statistics.

The second, and much more pressing, is a sub-committee to focus on reforms to the R&D scheme. This will look at whether the reforms have gone far enough to modernising the scheme (beyond allowing cloud and hosting costs and mathematics etc), how successful these reforms are likely to be to encourage innovation, and the effectiveness of HMRC guidance.

Zeal will be submitting our comments on both of these consultations and will share the outcome of these in the coming months.

For help with HMRC enquiries on R&D Tax Credits claim, contact Adam Spriggs on adam@gozeal.co.uk