What was the outcome of HMRC’s R&D Communications Forum?

Two years on from the introduction of the Merged R&D scheme and even further on from the ramping up of efforts to crack down on error and fraud, HMRC have conducted an R&D Communications Forum.

This provided an opportunity to assess the current state of R&D tax relief claims and determine what, if anything, might change going forward.

As such, we have examined what was discussed so that innovative businesses and the accountants who help them can better know what is in store in the coming months.

Are R&D tax relief claims likely to change anytime soon?

Fortunately, the period of relative calm that has fallen on R&D tax relief claims since the Merged Scheme was introduced seems set to persist in the near future.

HMRC and the Treasury promoted the stability of the scheme amid a general air of satisfaction that it was currently fulfilling the purpose for which it was designed.

This will be helpful for innovative businesses and accountants who may now have come to understand the Merged Scheme and can continue to plan for its persistence.

More details have been revealed concerning the Advanced Assurance initiative.

Rather than having every detail of an R&D tax relief claim validated before the claim is even written, it will only be possible for claimants to get assurance on two of the following:

• Eligibility of project(s)
• Eligibility of overseas expenditure
• Which party is allowed to claim in ‘contracted out’ scenarios
• Whether the claimant is exempt from the PAYE/NIC cap

This may go some way to settle one of the significant concerns around the initiative that it would provide false hope for ineligible claims or deter those who did have a legitimate claim if they poorly expressed information.

Advanced Assurance is still not as useful as expert guidance from an R&D tax consultant, but it can help less sure claimants understand some aspects of R&D tax relief claims.

Will there be stricter compliance measures going forward?

Having worked hard to cast off the shadow of suspicion that had fallen on R&D tax relief claims, it seems that HMRC are now content to shift the focus of compliance measures.

Error and fraud have been essentially eradicated in smaller claims, meaning that compliance measures may now be focused more on complex scenarios.

This will manifest as a move away from the previous ISBC bulk enquiries approach and will see more named inspectors being involved in what should be overall fewer compliance checks.

This is not to say that enquiries will dry up completely and they still should be viewed as a natural part of the R&D tax relief claim process.

However, it should mean that valid R&D tax relief claims, especially those that are of lower value, stand a greater chance of being approved.

Only time will tell whether the shifting focus will see an uptick in smaller, fraudulent claims that would then see the pendulum swing back the other way.

We hope that through vigilance and education, the quality of R&D tax relief claims can be preserved and improved going forward.

What does this mean for the future of R&D tax relief claims?

From the perspective of innovative businesses and accoutrements, very little is likely to change.

The R&D tax relief scheme is likely to continue in its current form and the only difference felt might be the reduction of enquiries.

Hopefully, this will see innovative businesses get access to the vital funds they deserve much sooner than they may have been if embroiled in an enquiry process.

As an R&D tax consultant, we will be registering as a tax advisor in order to stay compliant with new legislation.

This means that we can continue to provide guidance and support as we enter the next chapter of R&D tax relief claims together.

Get in touch to find out how to keep making the most of R&D tax relief claims.

Adam Bointon