HMRC’s new approach to R&D Tax Credit claims has resulted in a significant challenge to many companies. With the plethora of changes to the R&D tax relief programme, none have been more important than HMRC’s increased focus on what qualifies as an eligible R&D project. From the inception of the R&D tax relief programme, HMRC took a light-touch approach to querying R&D tax credit claims. Many companies are surprised to learn that HMRC reviewed very few claims to determine if the projects met the R&D tax relief criteria. Most R&D tax relief claims were merely accepted ..read more

Effective August 2023, any company filing an R&D tax credit claim on their CT600 must first file Additional Information through the government portal. The Additional Information being sought includes a description of how each R&D project meets the eligibility criteria. Here are some do’s and don’ts for your R&D Tax Credit Submission Ensure you identify the competent professional within the company that directs the R&D project. HMRC is looking for someone who has the academic and practical experience to carry out the R&D project. If a non-technical person is selected as a c ..read more

The R&D tax credit scheme has basically been overhauled. How the programme will be administered in the future will be quite different from what accounting firms and claimants experienced since the programme’s inception. We have highlighted the main changes to the programme. There are other changes, and we will be reviewing those in subsequent newsletters. Compliance Check While RDP predicted it, the R&D tax credit claims submitted in error under the programme has ballooned. HMRC reported to the House of Commons in the fall of 2023 that they estimated 50% of all R&D tax credit claim ..read more

As many of you have now heard, HMRC is stepping up their compliance checks of R&D tax credit claims but are you 100% confident your R&D tax credit claim qualifies? HMRC told the House of Commons that they believe 50% of all R&D tax credit claims, or over 40,000 claims, are in error. This is a big number. For the most part, the reason HMRC is making this assertion is that R&D projects claimed by companies do not meet the eligibility criteria to be considered R&D. Software companies are no exception. Here are the top five reasons why companies are ineligible: You have not id ..read more

Autumn Statement 2023 The Autumn Statement 2023 announced some changes to the R&D Tax Credit programme for 2024. RDP have put together a summary of what companies can expect for their R&D Tax Credit submissions from April 2024. Merging RDEC and SME HMRC and the Government are moving ahead to merge the SME scheme into the RDEC scheme. This will apply for accounting periods beginning on or after 1 April 2024. Under the merged scheme the R&D tax credit rate will be at the current RDEC rate of 20%. However, as described below there will be additional tax relief for R&D intensive SM ..read more

So far in 2023, we have seen a number of changes to the R&D tax credit relief programme. We thought it might be useful to summarise and share the 2023 R&D Tax Credit Rules. The environment for claiming R&D tax credits has drastically changed as HMRC now believes 50% of all SME claims are made in error. That means as many as 40,000 SME R&D tax credit claims per year are in error. HMRC’s reaction to this was to hire over 300 inspectors to carry out compliance checks on R&D claims. Before you file your R&D submission, you need to consider if you qualify in accordance with ..read more

So far in 2023, we have seen a number of changes to the R&D tax credit relief programme. We thought it might be useful to summarise and share the 2023 R&D Tax Credit Rules. The environment for claiming R&D tax credits has drastically changed as HMRC now believes 50% of all SME claims are made in error. That means as many as 40,000 SME R&D tax credit claims per year are in error. HMRC’s reaction to this was to hire over 300 inspectors to carry out compliance checks on R&D claims. Before you file your R&D submission, you need to consider if you qualify in accordance with ..read more

Recently, the Chief Executive of HMRC was under pressure from the House of Commons Treasury Committee surrounding R&D Tax Credit fraud and error. He was asked to explain how R&D Tax Credit fraud and error had all of a sudden increased from £336 million to £1.13 billion. The Chief Executive admitted that they underestimated the level of fraud and error within the R&D Tax Credit Programme. He explained that they thought they had the best method to measure the number of eligible R&D claims. But since doing random enquiry checks, they realised that the method was wrong, and the lev ..read more

Are your clients taking advantage of the Patent Box regime, if not: Do you have any clients who: Earn a taxable profit in each or most years and Have, or are filing, for a Patent that was, or is being created, by their in-house R&D efforts? If the answer is yes to both of the above questions, then your client should consider electing to take advantage of  the Patent Box regime. If your client is making an R&D tax credit claim, the Patent Box can be claimed as well. In other words, a company can claim for both R&D tax relief and the Patent Box. Patent Box Regime The Patent Bo ..read more

Commencing 8 August 2023, any company filing an R&D tax credit claim must access the government gateway and complete Additional R&D Information (AIF). This is an additional step to filing the R&D claim on the CT600. If the AIF is not completed, the R&D claim will not be processed and the CT600 R&D tax relief claim will be invalid. HMRC reports that between 8 August 2023 and 3 September 2023, only half of companies filed the AIF. HMRC is now writing to these companies to tell them that their R&D claim is invalid and advise what they need to do to make a valid R&D ta ..read more