The consultation process ended in June, so we’re now awaiting the results. Some of the areas being examined include:

  • Whether having two separate schemes – the SME and RDEC – is effective and whether the differences between schemes and the current relief rates, are still appropriate
  • Whether any changes should be made to the type of expenditure eligible for R&D Tax claims
  • Whether the current definition of R&D is still fit for purpose or could be amended to better reflect modern R&D
  • Operational challenges within the current system
  • Concerns about errors and fraud in R&D Tax claim submissions (it’s estimated that these could be costing taxpayers around £311 million a year)
  • Concerns about how well-targeted the existing scheme is
  • If there should be additional incentives available, for example to certain sectors or regions, or to boost ‘green’ innovation 
  • The roles of HMRC, agents and businesses in the R&D Tax claim process
  • How to account for R&D performed outside the UK by UK companies
  • How to create a more cohesive strategy for R&D Tax Relief across government departments

Our predictions on the outcome of the R&D Tax Reliefs Consultation

We’re excited to see what the conclusions of the consultation will bring to R&D Tax Relief and welcome a more modern, fit-for-purpose scheme.  

Will R&D Tax Relief come to an end?

We’re certain that the R&D scheme will continue for some years to come because it is a powerful tool in the government’s ambitious plans to raise the total investment in research and development to 2.4% of UK GDP by 2027.

The current government is rightly keen on R&D as a means of incentivising activity particularly post-Brexit and Covid. Their ambition is for the UK to be synonymous with innovation and creativity and we applaud this.

Will it be harder to get R&D Tax Relief?

We fully expect there to be more scrutiny as a result of the consultation, which is definitely needed.

However, more scrutiny doesn’t mean more complexity - we expect there to be more clarity overall, and for the schemes to become more streamlined. Certainly, if RDEC and SME schemes merge into one, it will make claims more straightforward.

Will there be any additional incentives brought in?

We may see some increased incentives for certain sectors such as green tech, and possibly a reduction for other industries.

This will help R&D Tax Relief influence the future direction of businesses and hopefully encourage more to move forward with ambitious, innovative projects.

Will I have to get professional advice in order to claim R&D Tax Relief?

We don’t think that it’ll be made compulsory for businesses to seek a professional advisor to make a claim. 

However, we’d definitely welcome anything emerging from the consultation that cracks down on some of the bad advice given to companies about R&D Tax Relief.  The current lack of regulation of unscrupulous, under-qualified ‘advisors’ can mean not getting everything you’re entitled to, being told you don’t qualify when you do, or even the possibility of fraudulent claims being made on your behalf.

Getting professional advice to help with your claim should make the process easy and lucrative for you – but choose your advisor carefully.

Venture Tax is poised and ready to translate the changes for our clients, to continue to bring them the maximum reward for their hard work and innovation, however R&D Tax Relief evolves.

We’re here to help you uncover what’s already yours.  If you’d like more information on R&D Tax and whether your business could be eligible, get in touch for a free chat.

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