HMRC set to reform R&D tax relief system

Following a recent review, HMRC have estimated they have lost out on £311m in the last 2 years alone due to fraudulent and incorrect claims. Consequently HMRC have put plans in place to reform the current R&D tax relief system in an attempt to reduce these issues.

HMRC’s first step toward stamping out the apparent misuse of R&D tax relief claims has been to recruit 100 new caseworkers to their R&D unit. This added manpower has already resulted in a material increase in enquiries.

Further steps will be taken from April 2023 to tighten compliance in respect on R&D tax relief claims, including the following specific measures:

  • Claims for relief will have to be made digitally – this is intended not only to make the system more efficient, but it should also make it easier for HMRC to spot “anomalies”.
  • A clampdown on “vague” claims – from April 2023 all claims must include details of qualifying activities and costs and all expenditure included must be demonstrably eligible (in theory this should mean no change at all, but HMRC are having to battle with claims which include little appropriate evidence).
  • All claims to be signed off by a senior named officer of the company – this is designed to increase accountability.
  • The agent’s details to be included in the claim – another step towards accountability and to highlight any professionals applying the legislation incorrectly.

There is also the possibility of a portal being put in place for companies to inform HMRC in advance that they will be making a claim for R&D tax relief.

These changes to the system are likely to just be the beginning of HMRC’s overhaul of the R&D scheme.

Now, more so than ever, it is essential that business owners engage qualified tax professionals to advise them on their tax relief claims, to ensure those claims are legitimate, in line with the current tax legislation and submitted to HMRC completely and correctly.

To find out more how our team can assist with R&D tax relief see out dedicated services page here.


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