Talking Tax: May 2023
Author: Adam Spriggs, R&D Tax Director
Government responds to House of Lords report into R&D Tax
In January 2023, the House of Lords published a detailed report on R&D tax reliefs, posing a number of questions to the Government about how they are administered, fraud and error rates, and how the relief schemes support growth in the economy.
The Government have now released a response accepting some of the recommendations and confirming that HMRC is taking “significant operational action” with “over 200 R&D specialists deployed on R&D tax reliefs, with additional flexible resource also available”.
The new claim notification requirement will still go ahead (despite the Lords’ concerns), but the Government has accepted the need to improve guidance for businesses, and promised to both consult on guidance and update parts of its CIRD manual for the new claim reporting obligations. Some revised guidance has already been published, including sectors ‘unlikely’ to have R&D.
There was criticism of the Advance Assurance Process and its lack of uptake, with most businesses feeling the process as far too time consuming to be worthwhile, but the Government has agreed to review it and promote its use more widely. However, this will not extend to the RDEC scheme.
Overall, the Government’s responses suggest that further changes are forthcoming, whether along the lines of a single scheme or higher rates for certain businesses, but there will also be a lot more administrative steps to keep downward pressure on the amount of error and fraud in R&D claims.
With HMRC increasing their compliance resource, there has never been more of a focus on ensuring claims are right and defendable. If you or your client finds themselves having queries raised on an R&D claim, reach out to Zeal. In the past 12 months we have dealt with over 13 enquiries for clients who had their claim prepared elsewhere, and have a fantastic track record in settling enquiries or managing the process through Alternative Dispute Resolution.
For help with R&D Tax Credits, contact Adam Spriggs on email@example.com