Talking Tax: July 2023
Author: Adam Spriggs, R&D Tax Director
R&D update: Non-compliance, legislation changes and delays
Last week HMRC released a report into non-compliance that cited 24.4% of SME claims contained non-compliance costing £1.04bn.
Whilst this figure would include genuine error and misunderstanding, it would also include companies settling for commercial reasons as well as those caught by the subcontracted and subsidised interpretations – which ultimately may be found to be incorrect.
Proposed legislation has also been released (due to come into force April 2024), that would see a single scheme where all companies can claim subcontractors (currently RDEC doesn’t allow Ltd company subcontractors). However, with the restriction on oversea subcontractors due to come into force at the same time, this will still have an impact on what can claimed.
In other news, the roll out of the Additional Information form has been delayed a week from 1 August to 8 August. No explanation has been provided for the delay.
Zeal has just finalised a second R&D claim for a software company client. Our team initially began working with the client 2 months into the project in their last accounting period and from very early on tracked the information we would need to complete the claim. This made the claim preparation process much easier and more straightforward. With HMRC’s increased scrutiny, the evidence of real time data capture or mechanisms in place to gather the specifics of the work undertaken, and not simply rely on 12-18 month old memories, not only ensures that all eligible activities are caught, but also will enable us to demonstrate to HMRC the added steps taken should they wish to raise an enquiry.
For help with R&D Tax Credits, contact Adam Spriggs on email@example.com