UK R&D tax credits to be overhauled

UK R&D tax credits to be overhauled

The UK government is proposing some changes to the current R&D tax claims process, primarily with a view to reducing the number of fraudulent claims.


The draft proposals - released last week - include a number of additional administrative steps, such as informing HMRC of an incoming claim in advance of submission, providing an endorsement of a company executive and including details of any third party which may have been advising on a R&D tax credit claim.


There are also plans to withdraw relief for subcontracted activity taking place outside of the UK. The move will focus the government’s support “more effectively on UK expenditure”, according to HMRC.


However, there is a caveat that “unavoidable” claims, citing geography, environmental, population or “other factors” can be considered as mitigating circumstances.


This change may lead some businesses to weigh up the lower cost of overseas labour versus what they can claim in UK R&D tax relief.


Still, there are some new measures proposed which will benefit claimants - particularly those operating in high-growth fields such as AI and robotics - as data licenses and cloud services will now be eligible for tax credit claims. This news will no doubt be welcomed by such businesses and should help to fuel growth of these specialist innovators within the UK.


According to HMRC ‘s annual report, it is estimated that the number of fraudulent claims stands at £311 million. There have also been several cases where payment of R&D tax credits has been suspended, while the claim is investigated. It is therefore unsurprising that additional measures are going to be introduced, but these changes are likely to lead to changes in the scope of work for R&D tax specialists.


It is now more essential than ever for R&D consultancies have the right hires in place. If you are thinking about adding to your R&D tax team in preparation for these changes, we can help! We have a number of excellent candidates who can fulfil the full spectrum of R&D tax roles, including R&D tax analyst, consultant, senior consultant, manager or director.


Please get in touch with our friendly team to find out more.