HMRC Cracking Down on R&D Claims

Companies that conduct Research and Development (R&D) need to be aware of the upcoming changes in the R&D tax relief starting 1 August , 2023. The UK government has become increasingly concerned about the number of companies that have been abusing the R&D scheme. As a result, HM Revenue and Customs (HMRC) has issued new guidelines on the claim process.

The new process requires an additional form to be completed, and it needs to be submitted to HMRC before the corporation tax return for the year. Failure to submit the form will result in HMRC amending the tax return to remove the R&D tax relief. The form needs to include the contact details of any agent involved in the claim, along with a director or employee responsible for the claim. Companies with more than three R&D projects will only need to provide information for 50% of the expenditure.
The guidelines further state that the form will require detailed information about the R&D project, such as the scientific or technological knowledge that the company aimed to achieve, the uncertainties the company encountered, and how the uncertainties were overcome.
The new guidelines have been put in place to prevent companies from exploiting the R&D scheme and to ensure that tax relief is only given to companies that genuinely undertake R&D work. Companies that conduct R&D should take note of the changes and ensure that they have all the necessary documentation and information to support their claims.