Government review of R&D tax relief abuse underway

The Government is currently consulting on proposals to tackle tax relief abuse through the research and development (R&D) tax credit scheme.

However, the Institute of Chartered Accountants in England and Wales (ICAEW) has raised concerns that some of the changes proposed could prevent genuine businesses from accessing R&D support.

Through its consultation – Preventing abuse of the R&D tax relief for SMEs: second consultation – the Government hopes to reduce the potential for fraudulent claims for R&D relief, in particular those individuals who may be exploiting the tax repayment available under the SME scheme.

To achieve this, the proposals suggest limiting claims for a payable R&D credit by reference to the claimant’s pay as you earn (PAYE) liabilities.

The ICAEW has raised several points of concern about these proposals and fear that they could create an additional burden on compliant businesses.

HMRC has stated that claims below £20,000 will not be affected by the cap, which should mean that start-up ventures with minimal PAYE liabilities are not significantly affected by the new measures.

HMRC has also proposed that businesses making genuine use of the tax credit scheme for R&D expenditure can make an uncapped claim if they provide evidence around the management of intellectual property (IP) to support the claim.

This consultation has been running alongside HMRC’s other proposals which look at the scope of R&D expenditure in relation to cloud services.

This additional consultation closes on 13 October. We will be providing our thoughts to the Government on these proposals and will aim to keep you updated, as and when new details are confirmed.

content team

Our Content Team is the R&D specialised, curious and thorough group behind made.simplr's blog and R&D resources, covering topics of interest to the R&D, accounting and innovation world.

Privacy Settings
We use cookies to enhance your experience while using our website. If you are using our Services via a browser you can restrict, block or remove cookies through your web browser settings. We also use content and scripts from third parties that may use tracking technologies. You can selectively provide your consent below to allow such third party embeds. For complete information about the cookies we use, data we collect and how we process them, please check our Privacy Policy
Consent to display content from Youtube
Consent to display content from Vimeo
Google Maps
Consent to display content from Google
Consent to display content from Spotify
Sound Cloud
Consent to display content from Sound