Following the substantial overhauls last year with the rollout of the Merged Scheme, we have entered into a relatively calm period for R&D tax relief.
In fact, the attention now seems to be shifting away from reforming the way that R&D tax relief works and is now centred around clarifying the existing guidelines.
This is being achieved through official revisions and some notable tribunal cases, and could be ushering in an era of unprecedented clarity.
Are R&D tax relief claims becoming easier to understand?
With some recent updates to guidance from HM Revenue and Customs (HMRC) and further updates planned later this year, the scope of eligibility for R&D tax relief claims is becoming more defined.
We have mentioned in another article how creative industries stand to benefit from revised guidance later this year.
This will open the door to more R&D tax relief claims from companies that work to resolve scientific and technological uncertainty within creative industries.
The proposed clarity that is coming follows on from clarification given earlier this year, which saw the assertion that payments from customers are not treated as subsidising R&D unless the payment is specifically linked to those activities.
Alongside the added clarity for guidelines, recent tribunal rulings have provided much-needed resolutions to long-held mysteries.
This includes the Realbuzz Group LTD v The Commissioners for HMRC ruling that we have previously covered, wherein historic enquiries were ruled to be unfair and were firmly put to rest.
Other tribunal rulings have focused on the issues of subcontracting costs, generally ruling in favour of the claimant and against HMRC.
The Collins Construction Ltd v HMRC case was vital in revealing that the restriction where expenditure is subsidised does not apply where there is a commercial contract between the parties and where there is no clear link between the price paid by the client and the expenditure on R&D.
A bit of a mouthful, but a welcome relief for companies that need to understand the rules around subsidised expenditure.
This was quickly followed by the Stage One Creative Services Ltd v HMRC, where a company claimed R&D tax relief for R&D work they conducted to meet the contracted-out services they provided to clients.
As the clients presented problems with no solutions, the company were right to file for R&D tax relief claims and the tribunal supported this.
What does the future of R&D tax relief look like?
As R&D tax consultants, we welcome any additional clarity on the guidance.
We understand how much you, as accountants, want to support your innovative clients and having a clearer picture of how R&D tax relief claims work will enable this to happen.
We know that expanded clarity makes your clients feel more comfortable approaching R&D tax relief claims so that they can benefit from the money that is rightfully theirs for the work that they do.
Regardless of how clear the guidance is, we will always be on hand to help your innovative clients get the most out of R&D tax relief claims.
Support your clients in a new era of R&D tax relief clarity. Speak to our team today!
