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Labour’s plan for green technology could be a boon for R&D tax sector, says randd uk

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Author: Tom Mason

The Labour Party is targeting ‘clean energy by 2030’, with substantial investment earmarked for carbon capture, green hydrogen and sustainable automotive of up to £4 billion – in addition to the Green Prosperity Plan and the plan for Great British Energy, funded with £8.3 billion.

As a result, according to R&D tax relief specialist randd uk, it looks likely that productivity and innovation from these sectors will increase markedly in the coming years – which may well result in a spike in the number of R&D tax claims coming out of these industries.

Adam Bointon, Technical Director at randd uk, said that it is “highly likely” that HMRC will see an increase in the number of R&D tax relief claims from the green technology sector.

“Green technologies have been a growing area as part of our client base,” continued Adam. “Wherever there is funding for innovation, there will be R&D. Government funding also does not necessarily preclude the ability to make a claim – companies with Innovate UK grants can still claim for R&D tax credits, for example.”

As leaders in the R&D tax sector, the firm understands that HMRC is approaching the merged scheme with caution, employing an ongoing programme of enquiries into claims.

Its main concern with regards to the green energy sector, said the firm, is likely to be the creation or extension of a new technology, as opposed to the application of existing technology, which does not qualify.

Adam said: “There lots of instances where a company may state that this is the first time such a technology has been applied or utilised in the UK, but not state what they had to do to transform the underlying technology to make it applicable for use.

“These businesses find that their claim is investigated and may be unsuccessful.”

The firm has also issued a caution to businesses within the green energy sector and beyond that have not previously made a claim.

“A lack of understanding of what R&D for tax purposes really means is likely to be a challenge for the uninitiated,” said Adam, “or else missing the Advanced Notification period after their initial year end.

“Businesses that want to claim need to start thinking about R&D tax credits as soon after their year-end as possible, if not before.”

The firm are, however, optimistic about the stability of the R&D tax relief scheme and the definition of qualifying expenditure.

Adam finished: “The principle of R&D for tax purposes is the same across all sectors, it’s just that some sectors move faster than others – we see that in software for example, which can create confusion.

“It is up to the Competent Professional within the business to explain what they have done to move the frontier of science or technology – aside from this requirement, we’re unlikely to see the goalposts shift too dramatically.

“After a period of upheaval for the scheme, accountants and businesses alike will welcome this stability.”