Could local accountants soon be managing more R&D tax relief claims?

As R&D tax consultants, we have been observing and reporting on the ongoing challenges facing the UK in maintaining its strong position as a home for R&D.

There have been many high-profile exits from the country, most notably with pharmaceutical companies, which has understandably made the Government take notice.

With changes in how R&D may be funded, it may soon be the case that local accountants play a larger role in managing R&D tax relief claims.

In order for accountants to help clients with R&D, they need to understand how to effectively manage R&D tax relief claims.

How is R&D funding changing?

As indicated in the Autumn Budget and recently reasserted to business leaders, regional mayors may soon be empowered to spend tax revenue on more local priorities, which may include infrastructure for R&D.

 This is due to the announcement aligning with plans to invest more in AI and quantum computing to reposition the UK as a global powerhouse for R&D.

Rather than letting innovation pool in specific areas of the country, the new funding strategy might mean that regional mayors can use innovative businesses to enhance the local economies.

This will require a close working relationship between said businesses and the authorities, but this will be supported by accountants.

In order for innovative businesses to benefit from the investment, it is likely that they will need to show their value to the local economy.

This might mean creating more jobs that would inspire regional mayors to invest in the infrastructure required to support these innovative businesses.

One of the most effective ways to strengthen the financial position of an innovative business is through the use of R&D tax reliefs.

What role will R&D tax reliefs play in the new investment strategy?

One of the main benefits of R&D tax reliefs is the speed with which the innovative business receives funds.

Without R&D tax relief claims, innovation would be shackled to commercial success, meaning that only projects able to turn a profit would be worth pursuing.

R&D tax relief claims can be submitted for failed, ongoing or aborted projects as well as those that are unlikely to ever cause a significant economic impact for a business.

There are a host of eligible costs that can be included in an R&D tax relief claim, including staffing costs.

This may be significant if regional authorities come to view innovative businesses as being especially beneficial to the local job market.

As wages incurred doing R&D work can be offset by R&D tax relief claims, accurate submissions may empower innovative businesses to expand their workforce in a way that other businesses may find challenging.

The way in which the UK views innovation is beginning to shift.

Some may have felt that the Government were becoming too complacent and the recent announcements of new investment strategies seem to be a way to change that.

This may lead to different accountants wanting to help clients with R&D and they may benefit from seeking professional support to achieve this goal.

We work alongside accountants and innovative businesses as R&D tax consultants to ensure that R&D tax relief claims are well understood and effectively utilised.

Help shape the future of UK R&D by speaking to our team today.

Adam Bointon