HMRC Draft Guidance: R&D Tax Credits

HMRC is proactively paving the way for R&D Tax Relief Reforms on 1 April 2023 by releasing draft guidance that covers a number of technicalities and information requirements. Through stakeholder-driven dialogue, certain key clarifications have been addressed to ensure claims are accurate and efficient moving forward.

The Budget 2021 emphasized the importance of technology to drive economic growth, so government initiatives were announced to ensure that cutting-edge research remains within UK borders. Reforms such as encompassing pure mathematics and data/cloud computing costs under R&D tax reliefs have been implemented in addition to measures targeting abuse and compliance enhancement.

Companies are reminded of key proposed changes to the R&D tax credit system, designed to further ensure funds go towards legitimate research activities. These modifications include restrictions on subcontractor/EPW costs and data licenses/cloud computing services being claimable, a pre-notification for companies who have not made an R&D claim in 3 years or less, as well as mathematics now falling within eligible definitions of qualifying activity.

Furthermore additional information will be required before or at the same time the claim is made (to curb fraudulent claims). This can be found in section 5 of the draft guidance.

Accounting periods starting on or after April 1 2023 (and ending March 31 2024 and beyond) will be impacted by a new set of claims.

A link to the full draft legislation can be found below:

https://www.gov.uk/government/consultations/draft-guidance-research-and-development-rd-tax-reliefs

Do you need help with an HMRC enquiry?

Has your R&D tax relief claim attracted the attention of HMRC? Don’t panic.

Enquiries into R&D tax relief claims by HMRC are on the rise. Our highly-qualified team will provide the utmost support to secure a beneficial resolution for your HMRC R&D enquiry, so that you can rest assured knowing your business is in safe hands.

We are well equipped to offer actionable advice on any R&D tax relief enquiries made by HMRC as well as provide proactive reviews that can help ensure complete peace of mind during these uncertain times.

If you’ve been contacted by HMRC about your R&D Tax Credit claim, or you’d simply like to know more, please do get in touch using our contact form or call our friendly team on 0207 118 6045.