Want to know more?

R&D tax relief and public perception

Back
Author: Tom Mason

R&D tax relief and public perception

In the wake of the King’s Speech and 2024 General Election, R&D tax has found itself at the centre of efforts to balance the public purse – and not in a positive light.

News reports from within the industry and beyond, into widely read publications and platforms such as the BBC, have brought an alarming figure to public attention, namely that ‘error and fraud’ within the R&D tax credit scheme has lost £4.1 billion of taxpayer money.

We drew attention to the issues with this angle of reporting in a recent press statement. In particular, our Technical Director, Adam Bointon, commented on the reliance of the report on outdated data and comments from experts within the industry.

Taking a step backwards

Historically, particularly in the past couple of years, R&D tax relief has gone through several periods of turbulence.

Most recently, error and fraud were found to be responsible for 16 per cent of the entire cost of the scheme in 2021, leading to a large-scale overhaul of the claims process and the merging of the RDEC and SME schemes.

In the immediate aftermath of these findings in 2022/23, experts offered commentary that the R&D tax sector was akin to ‘the Wild West’, with an ‘unacceptable’ level of fraud and erroneous claims.

Even at the time, when many firms within the sector would have characterised this as fair, this was a sweeping generalisation. Now, with measures in place that are a specific response to these findings, these figures and comments are largely not applicable.

Using them in contemporary reporting on R&D tax has created a situation where business owners may miss out on the benefits of the merged scheme.

Widespread misinformation

Based on the BBC’s initial report, a number of national outlets have commented on the potential for R&D tax relief to take the position of scapegoat.

It’s no secret that the scheme has cost the taxpayer in the past, but this is largely no longer the case. Anti-abuse measures are now taking effect and the sector is far more regulated than in previous years, with the best advisory services prioritising integrity.

However, an acknowledged gap in the public purse has made R&D tax’s previous challenges a target for ongoing scrutiny and criticism.

As a sector, we should be quick to point out that we have already undergone major changes as a result of this, now heading into a period of stability where compliance and carefully planned claims are key.

If you find that public perception of R&D tax is making your clients uncertain about making a claim, it’s down to you and your team to address this. If you need help with this from the experts, we can provide it!

We can support you with advising clients on the realities of R&D tax relief. Contact a member of our advisory team today to find out more.