Over the past twelve months there have been a number of consultations on R&D reliefs; perhaps the most interesting one was looking at what is qualifying expenditure for the purposes of the relief and looking to make it a more targeted relief. Although responses to some of these consultations have been published and adopted, the most recent consultation (March 2021) has sought to bring them all together. 

The consultation announced in March this year is, however, more significant. It effectively signals a potential ‘root and branch’ rethink of the UK’s support for R&D through the corporate tax regime. Key points that it will cover include:

  • Definitions, eligibility and scope of the reliefs;
  • How well the reliefs are operating and whether this could be improved; and
  • Specific targeting of the reliefs.

In particular, the consultation will address:

  • Whether the two existing schemes of R&D tax incentives (the ‘SME’ scheme and the R&D expenditure credits scheme (‘RDEC’)) should be consolidated into a single relief;
  • Whether the R&D schemes should continue to be administered through the corporation tax self-assessment system, or instead be subject to a greater degree of assurance and scrutiny at the point that the claim is made;
  • The role and responsibilities of agents and advisers (including their fee structures) and HMRC in the claims process;
  • Whether the coverage and disbursement of the tax incentives is adequate or requires some revision.

The current consultation ends on 2 June 2021 it will be interesting to see how the government responds to representations received and what it may mean for the future of R&D claims. 

Although the current consultation is perhaps the most comprehensive review of the relief since its inception, there have been some changes to the relief that have come into effect from 1 April 2021:

  • For SME claims seeking a payable tax credit then the claim will be limited to £20,000 plus 3 times the company’s total PAYE & NIC liability for the period; and 
  • From an administration perspective as well as requiring a detailed project by project report on the activities undertaken you are now required to include a new from CT600L with your submission (this applies for claims being made for any claim filed now, not just for expenditure incurred post 1 April 2021). 

At Thomas Westcott we have extensive experience in preparing claims and dealing with HMRC. If you would like to find out more about making a claim please contact me or your nearest Thomas Westcott office.

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